Consumer Markets and Consumer Buyer Behavior

HARLEY DAVIDSON

Building Success
Understanding the customers emotions and motivation Determining the factors of loyalty Translating this information to effective advertising

Measuring Success
Currently 22% of all U.S. bike sales Demand above supply Sales doubled in the past 5 years with earnings tripled.

DEFINITIONS
Consumer buyer behavior refers to the buying behavior of final consumers individuals and households who buy goods and services for personal consumption All of these final consumers combine to make up the consumer market

MODEL OF CONSUMER BEHAVIOR

Product Price Place Promotion

Marketing and Other Stimuli

Economic
Technological Political Cultural

Buyers Decision Buyers Black Box

Characteristics Affecting

Process

Consumer
Behavior

Product Choice Brand Choice Dealer Choice Buyers Response Purchase Timing

Purchase Amount

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR Culture Social Personal

Psychological
Buyer

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Key Factors
Cultural Social Personal Psychological

Culture Forms a persons wants and behavior Subculture Groups with shared value systems Social Class Societys divisions who share values, interests and behaviors

FACTORS AFFECTING CONSUMER BEHAVIOR: CULTURE Most basic cause of a person's wants and behavior

Values Perceptions
Subculture Groups of people with shared value systems based on common life experiences. Hispanic Consumers Social Class People within a social class tend to exhibit similar buying behavior. Occupation

African American Consumers

Asian American Consumers Mature Consumers

Income
Education Wealth

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Key Factors
Cultural Social Personal Psychological

Groups Membership Reference Aspirational Opinion Leaders Buzz marketing Family Many influencers Roles and Status

FACTORS AFFECTING CONSUMER BEHAVIOR: SOCIAL

GROUPS

MEMBERSHIP
REFERENCE

FAMILY HUSBAND, WIFE, KIDS INFLUENCER, BUYER, USER

SOCIAL FACTORS

ROLES AND STATUS

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Key Factors
Cultural Social Personal Psychological

Age and life cycle Occupation Economic situation Lifestyle Activities, interests and opinions Lifestyle segmentation Personality and selfconcept

FACTORS AFFECTING CONSUMER BEHAVIOR: PERSONAL

Personal Influences
Age and Family Life Cycle Stage Occupation

Economic Situation

Personality & Self-Concept

Lifestyle Identification
Activities Interests Opinions

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Brand Personality Dimensions

Sincerity Ruggedness Sophistication Excitement Competence

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOR

Key Factors
Cultural Social Personal Psychological

Motivation Perception Learning Beliefs and attitudes

PSYCHOLOGICAL FACTORS MOTIVATION A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research is based on Freud; Looks for hidden and subconscious motivation Maslow ordered needs based on how pressing they are to the consumer

PSYCHOLOGICAL FACTORS PERCEPTION

Perception is the process by which people select, organize, and interpret information Perception Includes: Selective attention Consumers screen out information Selective distortion People interpret to support beliefs Selective retention People retain points to support attitudes

PSYCHOLOGICAL FACTORS LEARNING Learning describes changes in an individuals behavior arising from experience Learning occurs through: Drives Internal stimulus that calls for action Stimuli Objects that move drive to motive Cues Minor stimuli that affect response Reinforcement Feedback on action

PSYCHOLOGICAL FACTORS BELIEFS AND ATTITUDES Belief a descriptive thought about a brand or service may be based on real knowledge, opinion, or faith Attitude describes a persons evaluations, feelings and tendencies toward an object or idea They are difficult to change

HOUSEHOLD BUYING BEHAVIOR

Households are the basic unit of buying and consumption in a society

A household is a consumption unit of one or more persons identified by a common location with an address

HOUSEHOLD BUYING BEHAVIOR

FAMILIES AND HOUSEHOLDS

Family household A group of persons related by blood and/or marriage. Four types are most common: Married couples alone Married couples with children A single parent with children Extended family, which may include parents, childrens spouses, and/or grandchildren, and occasionally cousins Nonfamily household A household that does not contain a family A single person living alone in a dwelling unit Roommates Boarding houses

HOUSEHOLD BUYING BEHAVIOR

THE FAMILY DECISION-MAKING PROCESS

The same family member may not have all three roles A single role may be jointly held by more than one individual

HOUSEHOLD BUYING BEHAVIOR

STEPS IN FAMILY BUYING DECISIONS

Initiation of the purchase decision Gathering and sharing of information Evaluating and deciding Shopping and buying Conflict management

HOUSEHOLD BUYING BEHAVIOR FACTORS INFLUENCING INTERSPOUSAL INFLUENCE

Gender-role orientation Wifes employment status Stage in family life cycle Time pressure Socioeconomic development of the population

HOUSEHOLD BUYING BEHAVIOR

CHILDRENS INFLUENCE ON FAMILY DECISION MAKING

Children influence household buying in three ways:

Children express individualistic preferences for products paid for and bought by parents Children in their teen years begin to have their own money and become their own payers and buyers of items of selfuse Children influence their parents choice of products that are meant for shared consumption

HOUSEHOLD BUYING BEHAVIOR

CHILDRENS INFLUENCE ON FAMILY DECISION MAKING FAMILY ORIENTATION Childrens influence in the family decisions depends on whether the family has a social or a concept orientation Another way of classifying families is by how authority is exercised in the family

HOUSEHOLD BUYING BEHAVIOR

CHILDRENS INFLUENCE ON FAMILY DECISION MAKING LEARNING MECHANISMS

Instrumental Conditioning Children learn those behaviors and values that receive rewards from their parents Modeling Children look up to their parents as role models and try to internalize and adopt their values, roles, aptitudes, etc. Cognitive Low involvement There could be adoption of product choices because of familiarity or because these were used by ones parents High involvement Socialization influence can occur due to communication and education by parents about various brands or buying strategies

HOUSEHOLD BUYING BEHAVIOR

CHILDRENS INFLUENCE ON FAMILY DECISION MAKING INTERGENERATIONAL INFLUENCE

The transmission of values, attitudes, and behaviors from one generation to the other Forward IGI
From parents to children

Reverse IGI
From children to parents
Democratic justice

BUSINESS BUYING BEHAVIOR

A business is a licensed entity engaged in the activity of making, buying, or selling products and services for profit or nonprofit objectives

BUSINESS BUYING BEHAVIOR THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

Industrial Markets (Producers) Reseller Markets (Resellers) Government Markets (Fed, St, City) Not for Profit Associations
Key is intended use

BUSINESS BUYING BEHAVIOR

COMPARISON OF HOUSEHOLD AND BUSINESS BUYING

CHARACTERISTIC Specialization of customer roles Formalization of the buying process Accountability for decisions Internal capabilities HOUSEHOLD BUYING Combined or slightly specialized Informal BUSINESS BUYING Moderately to very specialized Slightly formal (small businesses) to formal (large businesses) Strict measures Weak (small businesses to very strong (large businesses Operational and strategic complexity

Not formally measured Weak

Complexity of requirement

Little complexity

Business Vs Consumer Market

Characteristic Demand Volume # of Customers Location Distribution Nature of Buy Buy Influence Negotiations Reciprocity Leasing Promotion Business Market Organizational Larger Fewer Concentrated More Direct More Professional Multiple More Complex Yes Greater Personal Selling Consumer Market Individual Smaller Many Dispersed More Indirect More Personal Single Simpler No Lesser Advertising

COMPONENTS OF THE BUSINESS BUYING PROCESS

Procurement system
Nature of the purchase Organizational characteristics Buying center Rules and procedures A decision process

Forces Influencing Organizational Buying Behavior

A projected change in business conditions can drastically alter buying plan. Economic Outlook: Domestic & Global Pace of Technological Change Global Trade Relations Goals, Objectives, and Strategies Organizational Position of Purchasing Roles, relative influence, and patterns of interaction of buying decision participants Job function, past experience, and buying motives of individual decision participants

Environmental Forces

Organizational Buying Behavior

Organizational Forces

Group Forces

Individual Forces

COMPONENTS OF THE BUSINESS BUYING PROCESS

Buying Center A buying center is the group of people in an organization who participate in the buying process and share common goals, risks, and knowledge important to a purchase decision.

Buying Center
Eg. Dallas Buying Center Focus

Sportswear Western wear Jewelry Gifts Decorative accessories

COMPONENTS OF THE BUSINESS BUYING PROCESS

THE BUYING CENTER USER BUYER ANALYZER INFLUENCER GATEKEEPERS DECIDER

THE BUYING CENTER

Multiple Buying Influences
Buying centre includes people playing the following roles: users: Will use product in question; minimal - major influence influencers: Provides information to other members for evaluating alternative products or sets purchasing specifications; can operate within/outside buying center. analysers: data / market analysis experts deciders: make the actual decision to buy gatekeepers: Tight controller of information flow to other buying center members; can open/close gate for salespeople buyers: Assigned formal authority to select vendors and complete purchasing transaction.

THE BUYING CENTER

Multiple Buying Influences

Several people may play the same role or the same person may occupy more than one role. The size and composition of a buying centre will vary among businesses. Trying to determine who does what in a buying centre is very important but can also be very difficult. The challenges in a business buying-decision process suggest that co-ordination of the buying and selling activities would be beneficial to both firms.

THE BUYING CENTER

Business Buying Patterns
often will buy directly from the producer suppliers will often establish long-term close relationships with their customers some products are bought very infrequently average order is larger than in the consumer market negotiations often go on for months or years sometimes there is reciprocity involved often considerable need for after-sale service customers are very dependent on suppliers to guarantee a consistency of supply growing tendency to lease instead of buy

BUYING DECISIONS

TYPES OF BUYING DECISION BEHAVIOR

Complex Highly involved, significant brand differences Example computer Dissonance-reducing Highly involved, little brand differences Example carpeting Habitual Low involvement, little brand differences Example salt Variety-seeking Low involvement, significant perceived brand differences Example cookies

TYPES OF BUYING DECISIONS

High Involvement
Significant differences between brands Few differences between brands Complex Buying Behavior DissonanceReducing Buying Behavior

Low Involvement
VarietySeeking Behavior

Habitual Buying Behavior

THE BUYER DECISION PROCESS

Process Stages

Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior

Needs can be triggered by: Internal stimuli Normal needs become strong enough to drive behavior External stimuli Advertisements Friends of friends

THE BUYER DECISION PROCESS

Need Recognition Difference between an actual state and a desired state Internal Stimuli Hunger Thirst A persons normal needs External Stimuli TV advertising Magazine ad Radio slogan Stimuli in the environment

THE BUYER DECISION PROCESS

Process Stages

Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior

Consumers exhibit heightened attention or actively search for information. Sources of information: Personal Commercial Public Experiential Word-of-mouth

THE BUYER DECISION PROCESS

Process Stages
Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior

Evaluation procedure depends on the consumer and the buying situation. Most buyers evaluate multiple attributes, each of which is weighted differently. At the end of the evaluation stage, purchase intentions are formed.

THE BUYER DECISION PROCESS

PRODUCT ATTRIBUTES Evaluation of Quality, Price, & Features DEGREE OF IMPORTANCE Which attributes matter most to me?
BRAND BELIEFS What do I believe about each available brand? TOTAL PRODUCT SATISFACTION Based on what Im looking for, how satisfied would I be with each product? EVALUATION PROCEDURES Choosing a product (and brand) based on one or more attributes.

THE BUYER DECISION PROCESS

Process Stages
Two factors intercede between purchase intentions and the actual decision: Attitudes of others Unexpected situational factors

Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior

THE BUYER DECISION PROCESS

Satisfaction is important: Delighted consumers engage in positive wordof-mouth. Unhappy customers tell on average 11 other people. It costs more to attract a new customer than it does to retain an existing customer. Cognitive dissonance is common

Process Stages

Need recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior

BUYER DECISION PROCESS - NEW PRODUCTS

New Products
Good, service or idea that is perceived by customers as new.

Stages in the Adoption Process

Marketers should help consumers move through these stages.

BUYER DECISION PROCESS FOR NEW PRODUCTS

STAGES IN THE ADOPTION PROCESS Awareness Evaluation Interest Trial

Adoption

BUYER DECISION PROCESS FOR NEW PRODUCTS

Individual Differences in Innovativeness

Consumers can be classified into five adopter categories, each of which behaves differently toward new products.

Product Characteristics and Adoption

Five product characteristics influence the adoption rate.

BUYER DECISION PROCESS FOR NEW PRODUCTS

COMMUNICABILITY Can results be easily Observed or described to others?

RELATIVE ADVANTAGE Is the innovation superior to existing products?

DIVISIBILITY Can the innovation be used on a trial basis?

Product Characteristics

COMPATIBILITY Does the innovation fit the values and experience of the target market?

COMPLEXITY Is the innovation difficult to understand or use?

BUYER DECISION PROCESS FOR NEW PRODUCTS

International Consumer Behavior

Values, attitudes and behaviors differ greatly in other countries. Physical differences exist which require changes in the marketing mix. Customs vary from country to country. Marketers must decide the degree to which they will adapt their marketing efforts.