Chapter Three

Analyzing consumer and Business

market
 Classification of Market
• Consumer
• Business
 Consumer Behavior
• The field of Consumer Behavior:
“studies how individuals, groups, and organizations
select, buy, use, and dispose of goods, services,
ideas, or experiences to satisfy their needs and
desires.”
 Consumer Behavior

Consumer buyer behavior refers to the buying

behavior of final consumers—individuals and
households who buy goods and services for
personal consumption

Consumer market refers to all of the personal

consumption of final consumers

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 Model of Buyer Behaviour

• Consumer market:
– All individuals and households
– Buy or acquire goods and services for
consumption
 Characteristics Affecting Consumer Behavior

•• Cultural Factors
Social Factors
•• Buyer’s culture
Reference groups
• Buyer’s subculture
• Family
• Buyer’s social class
• Roles and status
• Personal Factors
• Psychological Factors
• Age and life-cycle stage
•• Occupation
Motivation
•• Economic
Perception
situation
•• Lifestyle
Learning
•• Personality
Beliefs andand self-concept
attitudes
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 Characteristics Affecting Consumer Behavior

Culture is the learned values, perceptions, wants, and

behavior from family and other important
institutions
Subculture are groups of people within a culture with
shared value systems based on common life
experiences and situations

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 Characteristics Affecting Consumer Behavior

Social classes are society’s relatively permanent

ordered divisions whose members share similar
values, interests, and behaviors
Social class is measured by a combination of occupation,
income, education, wealth, and other variables
• The major American social classes
• Upper class
• Middle class
• Working class
• Lower class
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 Characteristics Affecting Consumer Behavior
Social Factors
Groups
Membership groups have a direct influence and to which a person
belongs
Aspirational groups are groups to which an individual wishes to
belong
Reference groups are groups that form a comparison or reference in
forming attitudes or behavior
Opinion leaders are people within a reference group with special
skills, knowledge, personality, or other characteristics that can
exert social influence on others
• Buzz marketing enlists opinion leaders to spread the word
• Social networking is a new form of buzz marketing
• [Link]
• [Link]

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 Characteristics Affecting Consumer Behavior

Social Factors
Family is the most important consumer-buying organization in society
Social roles and status are the groups, family, clubs, and organizations
to which a person belongs that can define role and social status
Personal Factors

• Personal characteristics
• Age and life-cycle stage
• Occupation
• Economic situation
• Lifestyle
• Personality and self-concept
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 Characteristics Affecting Consumer Behavior

Personal Factors
Age and life-cycle stage
• RBC Royal Band stages:
• Youth—younger than 18
• Getting started—18-35
• Builders—35-50
• Accumulators—50-60
• Preservers—over 60
Occupation affects the goods and services bought by consumers
Economic situation includes trends in:
• Personal income
• Savings
• Interest rates
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 Characteristics Affecting Consumer Behavior

Personal Factors

Lifestyle is a person’s pattern of living as expressed in his or

her psychographics
• Measures a consumer’s AIOs (activities, interests, and opinions) to
capture information about a person’s pattern of acting and
interacting in the environment
SRI Consulting’s Values and Lifestyle (VALS) typology
• Classifies people according to how they spend money and

time
• Primary motivations
• Resources
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 Characteristics Affecting Consumer Behavior

Personal Factors
• Primary motivations
• Ideals
• Achievement
• Self-expression
• Resources
• High resources
• Innovators exhibit all primary motivations
• Low resources
• Survivors do not exhibit strong primary motivation

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Characteristics Affecting Consumer Behavior
Personal Factors
Personality and Self-Concept
Personality refers to the unique psychological
characteristics that lead to consistent and lasting
responses to the consumer’s environment
Brand personality refers to the specific mix of human
traits that may be attributed to a particular brand
• Sincerity

• Excitement

• Competence

• Sophistication

• Ruggedness

Self-concept refers to people’s possessions that

contribute to and reflect their identities 5-22
 Characteristics Affecting Consumer Behavior

Psychological Factors
Motivation
A motive is a need that is sufficiently pressing to direct
the person to seek satisfaction
Motivation research refers to qualitative research
designed to probe consumers’ hidden, subconscious
motivations
Abraham Maslow’s Hierarchy of Needs
• People are driven by particular needs at particular

times

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 Characteristics Affecting Consumer Behavior
Psychological Factors
Perception is the process by which people select, organize, and
interpret information to form a meaningful picture of the world
from three perceptual processes
Selective attention is the tendency for people to screen out
most of the information to which they are exposed
Selective distortion is the tendency for people to interpret
information in a way that will support what they already
believe
Selective retention is the tendency to remember good points
made about a brand they favor and to forget good points
about competing brands

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Characteristics Affecting Consumer Behavior
Psychological Factors
Learning is the changes in an individual’s behavior arising from
experience and occurs through interplay of:
• Drives
• Stimuli
• Cues
• Responses
• Reinforcement
Belief is a descriptive thought that a person has about something
based on:
• Knowledge
• Opinion
• Faith
• Attitudes describe a person’s relatively consistent evaluations,
feelings, and tendencies toward an object or idea 5-30
 Types of Buying Decision Behavior

• Complex buying behavior

• Dissonance-reducing buying behavior
• Habitual buying behavior
• Variety-seeking buying behavior

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 Types of Buying Decision Behavior
Complex Buying Behavior

When consumers are highly motivated in a

purchase and perceive significant differences
among brands
Purchasers are highly motivated when:
• Product is expensive

• Product is risky

• Product is purchased infrequently

• Product is highly self-expressive

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 Types of Buying Decision Behavior

Dissonance-reducing buying behavior occurs

when consumers are highly involved with an
expensive, infrequent, or risky purchase, but see
little difference among brands
Post-purchase dissonance occurs when the
consumer notices certain disadvantages of the
product purchased or hears favorable things
about a product not purchased

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 Types of Buying Decision Behavior
Habitual buying behavior occurs when consumers
have low involvement and there is little significant
brand difference
Variety-seeking buying behavior occurs when
consumers have low involvement and there are
significant brand differences

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 The Buyer Decision Process

Five stages in the buyer decision process

1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior

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 The Buyer Decision Process
Need Recognition
Need recognition occurs when the buyer recognizes a
problem or need triggered by:
• Internal stimuli

• External stimuli

Information Search
Information search is the amount of information needed in
the buying process and depends on the strength of the
drive, the amount of information you start with, the ease
of obtaining the information, the value placed on the
additional information, and the satisfaction from searching

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 The Buyer Decision Process
Information Search
Sources of information:
Personal sources—family and friends
Commercial sources—advertising, Internet
Public sources—mass media, consumer organizations
Experiential sources—handling, examining, using the product
Evaluation of Alternatives
Evaluation of alternatives is how the consumer processes
information to arrive at brand choices

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 The Buyer Decision Process

Purchase Decision

The purchase decision is the act by the consumer to buy the most
preferred brand
The purchase decision can be affected by:
• Attitudes of others

• Unexpected situational factors

Post-Purchase Decision

The post-purchase decision is the satisfaction or dissatisfaction the

consumer feels about the purchase

Relationship between:
• Consumer’s expectations

• Product’s perceived performance

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 The Buyer Decision Process
Post-Purchase Decision
The larger the gap between expectation and
performance, the greater the consumer’s
dissatisfaction
Cognitive dissonance is the discomfort caused by a post-
purchase conflict
Customer satisfaction is a key to building profitable
relationships with consumers—to keeping and growing
consumers and reaping their customer lifetime value

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 The Buyer Decision Process for New Products
New product is a good, service, or idea that is perceived by
some potential customers as new
Adoption process is the mental process an individual goes
through from first learning about an innovation to final
regular use
Stages in the Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
 The Buyer Decision Process for New Products

Stages in the Adoption Process

Awareness is when the consumer becomes aware of the
new product but lacks information
Interest is when the consumer seeks information about
the new product
Evaluation is when the consumer considers whether trying
the new product makes sense
Trial is when the consumer tries the new product to
improve his or her estimate of value
Adoption is when the consumer decides to make full and
regular use of the product
 The Buyer Decision Process for New Products
Individual Differences in Innovation

Early adopters are opinion leaders and adopt new ideas

early but cautiously
Early majority are deliberate and adopt new ideas before
the average person
Late majority are skeptical and adopt new ideas only after
the majority of people have tried it
Laggards are suspicious of changes and adopt new ideas
only when they become tradition
 The Buyer Decision Process for New Products

Influence of Product Characteristics on Rate of

Adoption
Relative advantage is the degree to which an innovation appears
to be superior to existing products
Compatibility is the degree to which an innovation fits the
values and experiences of potential consumer
Complexity is the degree to which the innovation is difficult to
understand or use

Divisibility is the degree to which the innovation may be tried on

a limited basis
 Organizational Buying
• Organizational buying is:
“the decision-making process by which formal
organizations establish the need for purchased
products and services and identify, evaluate, and
choose among alternative brands and suppliers.”
 Organizational Buying

• Compared to Consumer Markets, Business

Markets have . . .
– Fewer buyers
– Larger buyers
– Geographically concentrated buyers
– Close relationships with their supplier-customers
 Organizational Buying

Other Business Market Characteristics

• Fluctuating demand • Multiple buying
• Derived demand influences
• Inelastic demand • Multiple sales calls
• Professional • Direct purchasing
purchasing • Reciprocity
• Leasing
 Organizational Buying
• The Business Market Includes For-Profit
Companies and Two Specialized Groups:
– The institutional market
• Schools, hospitals, prisons, etc. with captive
audiences
• Cost and quality standards drive purchases
– The government market
• Bidding process awards contracts
– Business organization
 Organizational Buying
• Routine reorders from approved vendor list
• Buying Situationsminimal time commitment
Low involvement,
•• Example: copier paper
Straight rebuy
• Modified rebuy
• New task
 Organizational Buying

Buying Situations • Specifications,

prices, delivery
• Straight rebuy terms or other
aspects require
• Modified rebuy modification
• New task • Moderate level of
involvement and
time commitment
• Example: desktop
computers
 Organizational Buying

Buying Situations • Purchasing a

product or service
• Straight rebuy for the first time
• Modified rebuy • High level of
involvement and
• New task time commitment;
multiple influences
• Example: selecting a
web site design firm
or consultant
 Participants in Business Buying

Buying center members fill one or more

roles in the purchase decision process:
• Initiators • Deciders
• Users • Approvers
• Influencers • Buyers

Gatekeepers
 Influences on Business Buyers
• Demand level
Major Influences • Economic outlook
• • Interest rates
Environmental
• Technological change
• Organizational
• Politics/regulations
• Interpersonal
• Competition
• Individual • Concerns for social
responsibility
 Influences on Business Buyers

Major Influences • Objectives

• Policies
• Environmental • Procedures
• Organizational • Organizational
• Interpersonal structures
• Individual • Systems
 Influences on Business Buyers

Major Influences • Interests

• Authority
• Environmental • Status
• Organizational • Empathy
• Interpersonal • Persuasiveness
• Individual
 Influences on Business Buyers

Major Influences • Age

• Income
• Environmental • Education
• Organizational • Job position
• Interpersonal • Personality
• Individual • Risk attitudes
• Culture
 Organizational Buying Decisions

1. Problem Recognition 5. Proposal Solution

2. General Need 6. Supplier Selection

Description
7. Order-Routine
3. Product Specification Specification

4. Supplier Research 8. Performance Review

 Organizational Buying Decisions
Problem recognition is when someone in a
company recognizes a problem or need that can be
met by acquiring a good or a service

Problem recognition can occur because of internal

and external stimuli
General need description is when a company
describes the general characteristics and quantity of
a needed item
What are some items that would be included in a
general needs description for a training meeting?
 Organizational Buying Decisions
Product specification is when the buying organization
decides on and specifies the best technical product
characteristics for a needed item
What are some items that would be included in a product
specification description for a training meeting
Supplier search is when a buyer tries to find the best
vendor
What are the best ways for buyers to identify suppliers?
Proposal solution is when qualified suppliers are
invited to submit proposals
What are some important tools for writing and
researching a proposal
 Organizational Buying Decisions
Supplier selection is when a buyer receives proposals
and selects a supplier or suppliers
What are the six attributes that meeting planners consider
when selecting a location
Order-routine specification when a buyer writes the
final order with the chosen supplier(s), listing the technical
specifications, quantity needed, expected time of delivery,
return policies, warranties, and so on
Performance review is when a buyer rates its
satisfaction with suppliers, deciding whether to continue,
modify, or drop the relationship
The End