Outline of session

• Individual behavior
– General behavior
– Specific purchase behavior
• Group behavior
– Families
– Businesses
 Demands of marketing
• Marketers need to understand
– What INDIVIDUALS OR GROUPS buy
– Who buys as an individual or in the group
– When the individual or group buys
– Where they buy
– Why they buy
– How they buy
 Individual Behaviour

Stimulus Response
“You should have” Use/ Don’t use
 Individual Behaviour

Psychological
Explanations

Stimulus Response

Physical Contextual
Explanations Explanations
 Individual behavior: explanations
• Psychological explanations
– Motivation
– Perception
– Affect-feelings
– Beliefs-information
– Decision making-cognition
– Composite: values/ attitudes/ identity
 Individual behavior: explanations
• Physical explanations
– Sensory capabilities
– Skills
– Physical Attributes
• Contextual explanations
• Physical-Resources
• Social-networks/ Contacts-Family/ Work/ Advisors
• PEST
People respond differently

Dealing with diversity in marketing

 Classifying generic behavior
• Personality (Activities)
• Lifestyle (AI)
• Psychographics (AIO)
 Classifying and describing
specific behaviors
• Interaction behaviors
• Shopping behaviors
• Purchase behaviors
– Complex buying behavior
– Dissonance-reducing buying behavior
– Habitual buying behavior
– Variety-seeking buying behavior
Classifying and describing
specific behaviors
 Group behaviors
• Roles-Authority and responsibility
• Processes-inputs and outputs
• Specific group purchase behaviors
– Families
– Businesses
• Critical issues in group purchasing
– Role fragmentation
– Types of roles
Roles in Group Buying

User Initiator

Purchase
Buyer Influencer

Decider
Participants in the Buying
Process

Gatekeepers Users

Buying Centre
Deciders Influencers

Buyers
 Participants in the Buying
Process
1. Users are members of the GROUP who will use the
product or service
2. Influencers affect the buying decision. They often
help to define specifications and also provide
information for evaluating alternatives
3. Buyers have formal authority to select the supplier
and arrange terms of purchase
4. Deciders have formal or informal power to select or
approve the final suppliers
5. Gatekeepers control the flow of information to others
 Changes in groups:
Changes in behaviour
 Business Buyers
• Business-to-business buyers are characterised by
complex product requirements and complex group
structures.
• Although, strictly speaking, institutional and
government buyers are non-business, much of the
discussion on business-to-business buying also
applies in marketing and selling to government and
institutional buyers.
 Business Buyer Behaviour
• Marketers want to know how business buyers will respond
to various marketing stimuli. Marketing and other stimuli
affect the buying organisation and produce certain buyer
responses.
• As with consumer buying, the marketing stimuli for
business buying consist of the marketing mix elements
(Four Ps) or
– extended marketing mix elements in the case of service
organisations: product, price, place, promotion, people
and processes and physical evidence.
• Other stimuli include major forces in the environment:
– economic, technological, political, cultural and
competitive.
 Characteristics of
Business Purchasing
Nature of buying unit
1. Professional purchasing
2. Several buying influences

Types of decisions and decision processes

1. More complex and formalised decisions
2. Direct purchasing
3. Reciprocity
4. Leasing
Business and Consumer Buying
Situations
A Model of Business Buying
Behaviour
Major Influences on Business
Buying
Three Types of Buying
Situations
 Major Types of Business
Buying Situations
• Where a straight rebuy occurs, the buyer re-orders
items without any modifications. It is usually handled on a
routine basis by procurement officers.
• In a modified rebuy, the buyer wants to modify product
specifications, prices, terms or suppliers. The modified
rebuy usually involves more decision participants than
the straight rebuy.
• A new task situation is an industrial buying situation in
which the buyer purchases a product or service for the
first time.
 Classification of business
buyers
• Business markets are characterised by a wide
diversity in customer types and products.
• ISIC
– Industries are classified according to the International
Standard Industrial Classification (ISIC).
– Many countries have their own classification scheme e.g.
Australian and New Zealand Standard Industrial
Classification (ANZSIC).
• Function in value added network
– Manufacturer/ Wholesaler/ Retailer
• Type of value propositions delivered
– Service/ FMCG
 Characteristics of Business
Markets
Market Structure and Demand

1. Fewer buyers
2. Larger Buyers
3. Close supplier-customer relationships
4. Geographically concentrated buyers
5. Derived demand
6. Inelastic demand
7. Fluctuating demand
 Institutional and
Government Markets
Institutional Markets

Low Budgets Captive Patrons

Government Markets

Centralised Buying Public Review

Outside Publics Submit Bids

Non-economic Criteria
 Institutional and Government
Markets
• Institutional Markets: consists of schools, TAFE
colleges, polytechnics, universities, hospitals, nursing
homes, prisons and other institutions that provide goods
and services to people in their care.
• Government Markets: in every country, the government
market comprises a significant portion of business activity.
• Government Buyer Decision Process: Government
practices are often bureaucratic with regulations, low bid
prices, delays and policy changes. Yet, the government is
often helpful in providing information on buying needs and
procedures.