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CONSUMER/INDUSTRIAL
BUYER BEHAVIOUR
MMM SEM IV (2014)
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SYLLABUS
Introduction - why consumer behaviour including economics of consumerbehaviour?
Social psychology and its impact on marketing
Influence on consumer behaviour, environmental and individual determinants;organizational influence.
Models and theories of consumer behaviour.
Consumer research and market segmentation.
Specifics of decision process:
(a) Problem recognition.
(b) Search and evaluation of alternatives.
(c) Purchase behaviour.
(d) Post purchase behaviour
Consumerism in India.
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In our factory, we make
lipstick. In our advertising,
we sell hope.
~Charles RevsonRevlon Cosmetics
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Remember Me?
I'm the fellow who goes into a restaurant, sits down and patiently
waits while the waiter do everything but take my order. I'm the fellowwho goes into a department store and stands quietly while the sales
attendants finish their little chitchat. I'm the man who drives into a
petrol pump and never blows his horn, but waits patiently while the
attendant finishes reading his comic book.
"Yes, you might say, I'm a good guy. But do you know who else I am?
I am the fellow who never comes back, and it amuses me to see you
spending thousands of rupees every year to get me back into your
store, when I was there in the first place, and all you had to do to keepme was to give me a little service; show me a little courtesy.
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What Is Marketing?
Planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and
services to create exchanges that satisfy individualand organizational objectives
Finding a need and filling it!
OR
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Introduction - why consumer
behaviour including economicsof consumer behaviour?
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Behavior occurs either for the individual, or in thecontext of a group (e.g., friends influence what kinds ofclothes a person wears) or an organization (people onthe job make decisions as to which products the firm
should use). Consumer behavior involves the use and disposal of
products as well as the study of how they arepurchased.
Product use is often of great interest to the marketer,because this may influence how a product is bestpositioned or how we can encourage increasedconsumption.
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Consumer behavior involves services and
ideas as well as tangible products.
The impact of consumer behavior on society is
also of relevance. For example, aggressive
marketing of high fat foods, or aggressive
marketing of easy credit, may have serious
repercussions for the national health andeconomy.
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Need to study ?
You cannot take the consumer for granted
any more
Therefore a sound understanding of
consumer behaviour is essential for thelong run success of any marketing program
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Perspectives
Logical Positivism
1. Understanding and predicting consumerbehaviour
2. Cause and effect relationships that governpersuasion and/or education
Post Modernto understand consumption
behaviour without any attempt to influence it
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Why is this important?
Out of 11000 products launched by 77
companies, only 56% are present five years
laterKuczmaski & Associates
Only 8% of new product concepts offered by
112 leading companies reached the market.
Out of this 83% failed to reach marketing
objectivesGroup EFO Ltd., Marketing News, Feb 1, 1993, Pg 2
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MEET THE NEW CONSUMER
and smile when you do because sheis your boss. It may not be the
person you thought you knew.
Instead of choosing from what you
have to offer, she tells you what she
wants. You figure it out how to giveit to her.
-Fortune Editor
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A new product must satisfy
consumer needs, not the needs andexpectations of management.
Understanding and adapting toconsumer motivation and behaviour is
not an optionit becomes a necessityfor competitive survival
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Consumer Behaviour The study of consumer behavior focuses on how
individuals make decisions to spend theiravailable resources (time, money, effort) on
consumption-related items (Schiffman andKanuk, 1997).
According to Solomon (1996), consumer behavioris a study of the processes involved when
individuals or groups select, purchase, use, ordispose of products, services, ideas, orexperiences to satisfy needs and desires.
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Based on concepts from
Psychology
Sociology
Anthropology Marketing
Economics
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Failure rates of new products
introduced
Out of 11000 new products introduced by 77
companies, only 56% are present 5 years later.
Only 8% of new product concepts offered by
112 leading companies reached the market.
Out of that 83%reached the market failed to
meet marketing objectives.
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Can Marketing be
standardised?
No. Because cross - cultural styles,
habits, tastes, prevents suchstandardization
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Customer vs. Consumer Behaviour
Customer behaviour:abroad term that covers
both individual consumers who buy goods and
services for their own use and organizational
buyers who purchase business products
Consumer behaviour: the process through
which the ultimate buyer makes purchase
decisions
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Consumer behaviour
Consumer behaviour is the study of how people
buy, what they buy, when they buy and why they
buy.
It attempts to understand the buyer decisionmaking process, both individually and in groups.
It studies characteristics of individual consumers
such as demographics, psychographics, andbehavioural variables in an attempt to understand
people's wants.
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Buyer characteristics
Cultural
Social
Personal Psychological
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Buyers Decision
Product Choice
Brand Choice
Dealer Choice Purchase Timing
Purchase Amount
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Cultural factors
Culture
Subculture
Social Class
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Cultural Influences
Culture: values, beliefs, preferences, and
tastes handed down from one generation to the
next
It is important to recognize the concept of
ethnocentrism, or the tendency to view your
own culture as the norm, as it relates to
consumer behavior
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Core Values in the Culture
While some cultural values change over time, basiccore values do not
Examples of core values include:
Importance of family and home life
Education
Youthfulness
Individualism
International Perspecti e on C lt ral
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International Perspective on Cultural
Influences
Cultural differences are particularly important
for international marketers
Successful strategies in one country often
cannot extend to other international markets
because of cultural variations
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Subcultures: subgroup of culture with its own,distinct modes of behaviour
Cultures are not homogeneous entities with
universal values. Subcultures can differ by:
Ethnicity or Nationality
Age or Gender Religion
Social class or Profession
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Social Influences
Group membership influences an individual'spurchase decisions and behavior in both overt andsubtle ways.
Norms: are the values, attitudes, and behavioursthat a group deems appropriate for its members
Status: is the relative position of any individualmember in a group
Roles define behaviour that members of a groupexpect of individuals who hold specific positionswithin the group
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Reference groups: groups whose value
structures and standards influence a person's
behaviour
Requires two conditions:
The purchased product must be one that others can
see and identify
The purchased item must be conspicuous; it muststand out as something unusual, a brand or product
that not everyone owns
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Social classes: groups whose rankings aredetermined by occupation, income, education,family background, and residence location.
Upper-upper Lower-upper
Upper-middle
Lower-middle Working class
Lower class
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Opinion leaders: trendsetters who purchase newproducts before others in a group and then influenceothers in their purchases
Family Influences
Autonomic role is when the partners independentlymake equal numbers of decisions.
Husband-dominant role is when the husband makesmost of the decisions.
Wife-dominant role is when the wife makes most of thedecisions.
Syncratic role is when both partners jointly make mostdecisions.
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Children and Teenagers in Family
Purchases
Growing numbers are assuming responsibility
for family shopping
They also influence what parents buy
They represent sizeable consumers in their
own right
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Personal Factors
Family Life Cycle
Occupation and Economic circumstances
Lifestyle Personality and self - concept
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Psychological Factors
Motivation
Perception
Learning Beliefs and Attitudes
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Buying Roles
Initiator
Influencer
Decider Buyer
User
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Buying Behaviour
Complex
DissonanceReducing
Habitual Variety seeking
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Computer-Mediated Buying
Consumer computer-mediated buying, or online
buying, is the use of Internet technology to:
a. Seek information
b. Evaluate alternatives &
c. Make purchase decisions
This technology also allows marketers to customizetheir offering to the specific needs of individuals,
thereby increasing customer value and satisfaction.
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Post - Purchase Behaviour
Satisfaction
Actions
Use and Disposal
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Cognitive Dissonance
Cognitive Dissonance is a feeling of post-purchase psychological tension or anxiety.
To alleviate cognitive dissonance,
consumers often search for information to
reinforce their purchase decision.
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Maslows Hierarchy of Needs
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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
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Perception
Selective Retention: Though people fail to registermuch information, they retain information thatsupports 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 messagesforreinforcement
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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; Opentests showed preferences
Can work to the advantage of marketers of strong brands
A car may seem to drive smoother
A beer may taste better
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Subliminal Perception
Subliminal perception means that you see or hear
messages without being aware of them.
The presence and effect of subliminal perception
on behaviour is a hotly debated issue, with morepopular appeal than scientific support.
Evidence suggests that subliminal messageshave some effect on behavior. If so, is their use
an ethical practice
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Perceived Risk
Perceived Risk represents anxieties felt because theconsumer cannot anticipate the outcomes of apurchase but believes that there may be negativeconsequences.
Perceptions of greater perceived risk are usuallyaccompanied by a more extensive externalinformation search concerning a purchase.
Types of Perceived Risk:
financial
physical
psychosocial
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Attitudes
A persons enduring favorable orunfavorable
evaluations, emotional feelings, or action
tendencies toward some object or idea
Attitude components:
Cognitive
Affective
Behavioural
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Changing Consumer Attitudes
Attempt to produce consumer attitudes that willmotivate the purchase of a particular product
Evaluate existing consumer attitudes and thenmake the product characteristics appeal to them
Modifying the Components of Attitude
Attitudes change in response to inconsistenciesamong the three components
Marketers can work to modify attitudes byproviding evidence of product benefits and bycorrecting misconceptions
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Learning
An immediate or expected change in behavior
as a result of experience.
The learning process includes the component
of:
Drive
Cue
Response
Reinforcement
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Brand Loyalty
Brand Loyalty is a favorable attitude toward andconsistent purchase of a single brand over time.
It results from positive reinforcement of previous
actions. There is evidence of brand loyalty in many
commonly purchased products in the U.S. and
the global marketplace.
P l D i f C
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Personal Determinants of Consumer
Behaviour - Needs and Motives
Need: an imbalance between a consumer's
actual and desired states
Motives: inner states that direct a person
toward the goal of satisfying a felt need
Shaping: process of applying a series
of rewards and reinforcements to permit more
complex behavior to evolve over time
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Self-Concept: A persons multifaceted picture
of himself or herself, composed of the:
Real self
Self-image
Looking-glass self
Ideal self
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Buying Process
Problem Recognition
Information Search
Evaluation Alternatives
Purchase Decision
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Problem or Opportunity Recognition
Consumer becomes aware of a significant
discrepancy between the existing situation and
the desired situation
Motivates the individual to achieve the desired
state of affairs
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Search
Consumer gathers information related to theirattainment of the desired state of affairs
Identifies alternative means of problem solution
May cover internal or external sourcesof information
Brands that a consumer actually considers buyingbefore making a purchase decision are known asthe evoked set
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Driving Search
Need More
Informat ion
More RiskLess knowledge
Less product experienceHigh level of interest
Less RiskMore knowledge
More product experienceLow level of interest
Need Less
Informat ion
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Evaluation of Alternatives Consumer evaluates the evoked set
Difficult to completely separate the second andthird steps, since some evaluation takes place asthe search progresses
Outcome of the evaluation stage is the choice of abrand or product (or possibly a decision to renewthe search)
Evaluative criteria : features that a consumerconsiders in choosing among alternatives
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Purchase Decision and Purchase Act
Consumer narrows the alternatives down to
one
The purchase location is decided
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Post purchase Evaluation
After the purchase, consumers areeither satisfied or experience post-purchase
anxiety Cognitive dissonance:
Post-purchase anxiety that results from an
imbalance among an individuals knowledge,beliefs, and attitudes after an action or decisionis taken
TYPES OF CONSUMER BUYING
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TYPES OF CONSUMER BUYING
BEHAVIOUR
There are four types of consumer buying
behavior, they are :
Routine Response/Programmed Behaviour
Limited Decision Making
Extensive Decision Making
Impulse buying
ROUTINE
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RESPONSE/PROGRAMMED
BEHAVIOUR Buying low involvement, frequently
purchased, low cost items.
Examples : Soft drinks, snack foods, milk etc.
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LIMITED DECISION MAKING
Buying product occasionally.
That is when you need to obtain information
about unfamiliar brand in a familiar product
category.
Example: Clothes--know product class but not
the brand.
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EXTENSIVE DECISION MAKING
Complex high involvement, unfamiliar,
expensive and infrequently bought products.
Spend a lot of time seeking information and
deciding. High degree of risk.
Example: Cars, homes, computers, education.
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IMPULSE BUYING
No conscious planning. The purchase of the same product does not always elicit the
same Buying Behaviour. Product can shift from onecategory to the next.
For example: Going out for dinner for one person may beextensive decision making (for someone that does not goout often at all), but limited decision making for someoneelse. The reason for the dinner, whether it is an anniversarycelebration, or a meal with a couple of friends will alsodetermine the extent of the decision making.