Welcome to MKT 301

The Principles of Marketing

Consumer Behaviour

1

"There is hardly anything in the world that some man can't make a little

worse and sell a little cheaper, and the people who consider price only

are this man's lawful prey." (John Ruskin, 1819-1900, English art critic and social commentator,)

Administration

• Lecturer: Bruce Sheppy

• E-Mail: sheppyb@richmond.ac.uk

• Attendance register

2

Agenda

• the dimensions of customer behaviour, who buys, how they

buy and the choice criteria used

• the differences between consumer and organizational buyer

behaviour

• the main influences on consumer behaviour—the buying

situation, personal and external influences

• the main influences on organizational buying behaviour—

the buy class, product type and purchase importance

• the marketing implications of the various dimensions of

consumer behaviour

Consumer Buying Behaviour

• Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

• The central question for marketers is:

―How do consumers respond to various marketing efforts the company might use?‖

Understanding Customers

How do

they buy?

What are

their choice

criteria?

Customers

Who is

important?

Where do

they buy?

When do

they buy?

Let’s consider the consumer decision process...

• Problem identification

• Information search

• Evaluation of alternatives

• Purchase

• Post purchase evaluation

Has anyone bought toothpaste lately? Is this how you did it?

(Please answer yes!!!!!)

For what types of goods or services are all steps likely to be

followed carefully?

Who is involved in the decision

process?

•Initiator- information gather

•Influencer – pester power

•Decider- he / she with the power

•Buyer who effects the transaction

•User- actual consumer

Phillips Juicer

Advertisement

clearly targets parents

of young children who are

concerned about their

nutrition and

health

Consideration Set: Technical,

Economic, Social and Personal

Consumer Buying Decision Process

Need

recognition

Information

search

Evaluate

alternatives

Post purchase

evaluation

Purchase

decision

Marketers influence this process using the

Marketing Mix.

Internal or

external

Personal,

Commercial,

Public,

Experiential

Sources

Rational vs.

Impulse

On own or in

consultation

Cognitive

Dissonance

Satisfaction or

Dissatisfaction

Bang &

Olufsen

Advertisement

provides

Highlights

both rational

and

emotional

factors likely

to influence

purchase

Evaluation of alternatives

•Evoked set includes those alternatives that are already in the memory or our retrieval

set, as well as those which are readily available and on display in a retail setting.

Research tells us that in certain product categories we may have 5 or 6 brands in our

evoked set.

•Inept Set: we are aware of products, but have no intention of buying

•Inert Set: products of which we are not aware and therefore, unlikely to

•purchase

Choice Criteria Used When Evaluating

Alternatives

Technical-

Reliability

Durability

Performance

Style/looks

Comfort

Delivery

Convenience

Taste

Social-

Status

Social belonging

Convention

Fashion

Personal-

Self –image

Morals

Emotions

Economic-

Price

Value for money

Residual value

Life style costs

Attributes used to measure product choice

• Attributes– Cost attributes Here we need to consider not only the cost of purchase, but

also the costs associated with operating, repairing or with selling on the product when we want to replace it.

– Performance attributes: These include the quality of the materials used, how reliable the product is and how generally it performs. This includes such attributes such as taste, safety or efficiency.

– Social attributes: These include some intangible benefits such as its reputation, image

– Availability attributes: We need to consider how easy the product is to purchase, such as a snack bar or soft drink, if there are credit terms for more involved purchases such as a car, or other factors such as delivery time and

– quality of service.

• Outcomes:

Once the consumer has made the final decision to purchase, he or she will either be satisfied with the purchase or dissatisfied with the purchase. If the purchase represented a level of risk to the consumer, then it is still likely that there are doubts. Consumers will very often question their own purchase, which we refer to as cognitive dissonance.

Model of Buyer BehaviorMarketing andOther Stimuli

Buyer’s Black Box

Buyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Buyer Characteristics

Buying Decision Process

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

Influences on consumer purchasing behavior

information

processing

motivation

beliefs and

attitudes

personality

lifestyle

lifecycle

culture

social class

geodemo-graphics

reference groups

Personal

influences

Social

influences

Consumer

The buying

situation

Behavioural Learning Theories:

Classical conditioning:

is the process of

using an established

relationship between a

stimulus and a

response to cause

learning

Operant conditioning:

individual respond to the stimulus that offers the most satisfactory rewards and subsequently the behaviour is repeated. The more rewarding the response, the more likelihood of a repeat purchase

Behavioural Theories and

Marketing

Classical conditioning uses an established

relationship between stimulus and response to cause

learning –

In advertising humour is known to elicit a pleasant

response and is used in the belief that these

pleasant feeling will be a condition of the product.

Operant conditioning is reinforcement through

rewards –

The use of free samples is based on these

principles

Red Bull

Advertisement

uses humour to

appeal to its

target market of

young adults

VIDEO OF ADVERT

Factors Influencing Consumer Behavior

Culture

Sub-culture

Socialclass

Social

Referencegroups

Family

Rolesand

status

Personal

Age andlife-cycle

Occupation

Economicsituation

Lifestyle

Personalityand

self-concept

Psycho-logical

Motivation

Perception

Learning

Beliefs andattitudes

Buyer

Cultural

Factors Affecting Consumer Behavior:

Culture

Culture• Most basic cause of a person's wants and behavior.

• Values, Perceptions, Wants & Behavior

Social Class

• Society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors.

• Measured by: Occupation, Income, Education, Wealth and Other Variables.

Subculture

• Groups of people with shared value systems based on common life experiences.

• Gay Consumers (Pink Pound)

• African Consumers

• Asian Consumers

• Mature Consumers

Factors Affecting Consumer Behavior:

Social

Social Factors

Groups

•Membership

•Reference (Opinion leaders)

Family

•Husband, wife, kids

•Influencer, buyer, user

Roles and Status

Factors Affecting Consumer Behavior:

Personal

Personal Influences

Age and Life CycleStage

Occupation

Economic Situation

Lifestyle Identification

Activities Opinions

Interests

Personality & Self-Concept

Consumer Life Cycle: Key consumer

expenditure/investment

Factors Affecting Consumer Behavior:

Psychological

PsychologicalFactors

Motivation

Perception

Learning

Beliefs and Attitudes

How you

select,

organize &

interpret

inputs.

Change in behavior

based on experience

Evaluations,

feelings &

behavioral tendencies

toward an object

or idea.

Biological or

psychological need that

seeks satisfaction

Perceptions, Attitudes in Practice

Why do some consumers always buy the

same brand of cola when they can not tell

the difference in blind taste tests?

Why do some consumers always buy the

branded pain reliever (eg: Neurofen) when

they know that the store brand (eg: Boots

brand) is made of EXACTLY THE SAME

ingredients?

Why do some people dislike a product that

they have never tried?

Why do we dislike certain football teams

and support others, even if all the players

change over time?

How we see

things

affects our

behaviour

and how

we act

Perception: Is this an old or

young woman?

Perception: What creature do you see?

So is this truth or belief or is it just what you perceive?

Maslow’s Hierarchy of Needs

Esteem Needs(self-esteem, status)

Social Needs(sense of belonging, love)

Safety Needs(security, protection)

Physiological Needs(hunger, thirst)

SelfActualization

(Self-development)

Buyer Characteristics can Affect Each StageWhich factor determined your "recognition" that you needed to choose a college? Which 2-3 factors had the greatest influence on your information search & decision to attend Richmond?

How many schools were in your consideration set? Any cognitive dissonance?

Personal

Age andlife-cycle

Occupation

Economicsituation

Lifestyle

Personalityand

self-concept

Psycho-logical

Motivation

Perception

Learning

Beliefs andattitudes

Social & Cultural

Referencegroups

Family

Roles &status

Social class

Culture &Subculture

Needrecognition

Informationsearch

Evaluatealternatives

Postpurchaseevaluation

Purchase

decision

Adopter Categorization on the Basis of

Relative Time of Adoption of Innovations

34%

Earlymajority

2.5%Innovators

Time of adoption of innovationsTime of adoption of innovations

34%

Latemajority

16%Laggards

13.5%Early

adopters

Diffusion of innovations theory was formalized by Everett Rogers in a 1962 book

called Diffusion of Innovations

•Innovators - venturesome, educated, multiple info sources, greater propensity to take

risk

•Early adopters - social leaders, popular, educated

•Early majority - deliberate, many informal social contacts

•Late majority - skeptical, traditional, lower socio-economic status

•Laggards - neighbors and friends are main info sources, fear of debt

What is a Business Market?

• Business Buyer Behavior refers to the buying behavior of all the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

• The business market is huge and involves many more pounds and items than do consumer markets.

B2B Marketing Defined

B2B marketing is the

management process responsible

for the facilitation of exchange

between producers of goods and

services and their organisational

customers

Product Types in Organisational

Buying:

Components

Plant &

equipment

Products &

ServicesMaterials

A Clothing Manufacturer and its Suppliers

Suppliers of

raw materials

and

componentsSuppliers of

manufacturing

equipment

Suppliers

of labour

Suppliers of

other equipment

and supplies

Suppliers of

services

Manufacturer

The Buying Organization

Model of Business Buyer Behavior

Marketing andOther Stimuli

Buyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Interpersonal and Individual Influences

Organizational Influences

Product or Service Choice

Supplier Choice

Order Quantities

Delivery Terms and Times

Service Terms

Payment

The Buying Center

Buying DecisionProcess

Business Buying Situations

Straight Rebuy

New Task Buying

Modified Rebuy

Invo

lved

Decis

ion

Makin

g

Participants in the Business Buying

Process: The Buying Center

Buying Center

UsersGatekeepers: Control info

flow into org

Buyers: eg purchasing

officer

Deciders: finalDecision maker

eg owner?

Influencers: eg IT dept in computers

Major Influences on

Organizational Buyers

Stages of the Business

Buying ProcessProblem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Routine Specification

Performance Review

Developments in Organizational

Purchasing Practice

Just-in-time purchasing

Online purchasing

Centralised purchasing

Relationship Marketing

Reverse marketing

Leasing

39

Chapter SummaryThere are key differences between consumer and

organizational buying.

There are 5 roles in the buying decision making group:

initiator, influencer, decider, buyer, user.

The level of involvement is a purchase situation will affect

the number of stages a consumer goes through before

making a purchase decision.

In consumer purchasing choice criteria can be categorised

as: technical, social, economic and personal.

The main influence on consumer buying behaviour are: the

buying situation, personal and social influences.

The main influence on organizational buying behaviour are:

the buy class, the product type, and the importance of the

purchase.

There have been key innovations in purchasing practice.

Reading: Chapter Three Jobber

and Fahy