Buyer Behavior

Dominant Family Purchase Demographic Factors The Consumer Buying Process Maslow’s hierarchy of needs Socioeconomic classification scheme Types of buyer behaviour The Buying Decision Process Organisational Buyer Behaviour

Buyer Behaviour

What is Consumer Behavior?

-How many times throughout the day do people make product decisions? -If you stop to think about it, many product decisions are made every day, some without much thought. -What should I wear? What should I eat? What am I going to do today? -Many product decisions are answered routinely every day and they help move the economy of cities, countries and ultimately the world. -Product decisions also shape life for the consumer. -How can simple decisions be so important? -Why do marketers spend millions of dollars to uncover the reasons behind these decisions?

Defining Consumer Behavior

What is Consumer Behavior?

-Consumer behavior: it is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services (impacts the world). -Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics.

-“All marketing decisions are based on assumptions and knowledge of consumer behavior” (Hawkins and Mothersbaugh, 2007).

-Researching consumer behavior is a complex process, but understanding consumer behavior is critical to marketers-they can use it to:

-Provide value and customer satisfaction. -Effectively target customers. -Enhance the value of the company. -Improve products and services. -Create a competitive advantage -Understand how customers view our products vs their competitors' products. -Apply marketing strategies toward a positive affect on society (encourage people

to support charities, promote healthy habits, reduce drug use etc.)

Defining Consumer Behavior

Dominant Family Purchase (Cozenza, 1985)

PRODUCT DOMINANT

DECISION

MAKER

TYPICAL DECISION

Women’s casual

clothing

Wife Price, style

Vacations Syncratic (both) Whether to go,

where

Men’s casual

clothing

Husband Type, price, style

Life insurance Husband Company, coverage

Homeowner’s

insurance

Husband Company, coverage

Household

appliances

Wife Style, brand, price

Age Stage in family life cycle Occupation Economic circumstances Lifestyle social influence variables

- family background- reference groups- roles and status

Demographic Factors

Marketing Inputs

Product

Price

Promotion

Place

The Consumer Buying Process

Marketing Inputs

Product

Price

Promotion

Place

Consumer

Purchase Decisions

Product Choice

Location Choice

Brand Choice

Other Choices

Psychological Inputs

Culture

Attitude

Learning

Perception

Cohen (1991)

Maslow’s Hierarchy of Needs

Physiological

Safety

Social

Esteem

Self Actualisation

UK socioeconomic classification scheme

Class name Social status Occupation of head of

household

% of

populatio

n

A Upper middle Higher managerial,

administrative or

professional

3

B Middle Intermediate managerial,

administrative or

professional

14

C1 Lower middle Supervisors or clerical,

junior managerial,

administrative or

professional

27

C2 Skilled working Skilled manual workers 25

D Working Semiskilled and unskilled

workers

19

E Those at lowest levels

of subsistence

Pensioners, widows,

casual or lower- grade

workers

12

How is the Mexican socioeconomic classification scheme?

http://www.nivelessocioeconomicos.com/index.php?option=com_content&task=view&id=32&Itemid=110

Portal Niveles Socioeconómicos - Criterios de Clasificación Socioeconómica

Value and Relationship Quality

-Consumers choose goods and services based on the assumption that they will be rewarded with value and satisfaction. -Consumption is the process by which goods and services are used and assigned a level of value by the consumer. -That level could be positive, if the customer was satisfied, or it could be negative if they did not find any value in their purchase. -Marketers have to provide the right combination of quality, price and customer service in order to give customers positive value and satisfaction. -That will in turn create happy, loyal customers. The formula looks like this:

Quality + Price + Customer Service = Value and Satisfaction

Consumer behaviour

Value and Relationship Quality-If a product/service is provided that has low quality, and a high price, that does not create a happy, satisfied customer. -At the same time, having a great product at the best possible price means nothing if the customer is treated badly, or not provided with the opportunity to return unwanted items.

Consumer behaviour

So what is meant by 'Quality?'

Quality is a product or service's ability to meet the customers' need or want. -Quality is difficult to define, and varies with each consumer, however we can take a look at some of the components of quality for products and services:

ProductsPerformance- The product does what it is supposed to do. Features- The product includes all the specifications that it says it has or that are required, this includes safety measures. Reliability- The product performs consistently. Durability- When the product is being used it has to last under the conditions of normal use. Serviceability- The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs. Aesthetics- This is important to consumers, products have to look good, and this contributes to a brand equity and identity. Perception- Even if the product has good quality, if the customer does not think so, then it won't sell. The customer has to have positive feelings about the product, the company, the brand name and the employees.

Consumer behaviour

So what is meant by 'Quality?‘ServicesResponsiveness- Services are performed in a prompt manner. Reliability-The service is performed right, the first time, and all subsequent times. Assurance- Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. If a customer has a bad experience with an employee, they will be less likely to purchase from the entire company's offerings. Customers expect technical competence and professionalism from salespeople. Empathy-Providing individualized attention to customers will make them feel special and keep them coming back. Tangibles- Some services provide physical evidence that they occurred, for example a restaurant cooks (service) and provides the food (product).

Consumer behaviour

Why People Buy

-Marketers spend millions of dollars trying to understand why people buy products and services. -Sometimes it seems that there is no reason for a purchase, but in reality there is always a reason. -Many factors are involved in a customers' buying decision, any one of which can become the deciding factor, such as:

-Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social status; preference for buying increases with price. -Snob effect: Desire to buy something nobody else has; preference for buying increases with rarity or scarcity. -Bandwagon effect: Desire to buy something everybody else is buying; preference for buying increases with perceived popularity. -Economic: To enhance their lifestyle or to fulfill two of Maslow's needs: physiological (food, shelter) and Safety and Security. -Psychological: This is the study of how people interact with their environment, products are consumed to enhance their well being, for example air fresheners, furniture and convection ovens.

Consumer behaviour

Why People Buy

-Sociological- The study of the thoughts, feelings, and behaviors of group interaction, especially in a social setting. People want to feel accepted and loved by their peers and they need to consume products that will appeal to their chosen groups. For example a consumer wants to join a kayaking team would have to purchase the proper gear, clothing and maybe even music genre in order to fit in with the group. -Practical- Consumers purchase products because they need them to survive, such as shoes and medicine. -Impractical- is the opposite of practical, purchasing products that are not necessary. -Rational- Purchases are made with logical, thought out reasoning. -Irrational- products are purchased for foolish or absurd reasons. -Factual- Purchasing products based on researched reports. -Emotional- purchasing products based on feelings -Buy to satisfy a need (for a reason). -Buy to satisfy a want (desire).

Consumer behaviour

Other reason why people buy

Consumer behaviour

-Complex buyer behaviour e.g. Intel Pentium Processor-Dissonance-reducing behaviour (brand reduces after-sales discomfort)-Habitual buying behaviour e.g. salt - little difference -Variety seeking behaviour- significant brand differences e.g soap powder

Types of buyer behaviour

-recognition of the need e.g a new PC-choice of involvement level (time and effort justified) e.g. two week ends-identification of alternatives e.g. Dell, PC World-evaluation of alternatives e.g. price, customer service, software support, printer/scanner package-decision- choice made e.g Epsom-action e.g buy Epsom model from Best Buy-post-purchase behaviour e.g. use, breakdowns, etc

The Buying Decision Process

Internal Influences – Learning

-Consumer behavior is largely learned behavior. -Learning is a change of behavior following an interaction between a person and their environment. -A person touches a hot stove and then gets hurt, because of that interaction they learn not to touch the hot stove again. -Most attitudes, values, tastes, behaviors, preferences, symbolic meanings and feelings are acquired through learning. -People buy things and then make decisions for future purchases based on if they liked the product, quality, service, and price. -Social organizations help people learn "appropriate" beliefs about issues like drinking and driving, proper nutrition, etc. -Companies that help their customers learn about their products and create positive feelings with their product, service, brand name, and employees-have a competitive advantage.

Consumer behaviour

Internal Influences – Memory

-Marketing messages can be effective only if the consumer correctly understands the messages, and remembers them when needed. -Memory refers to a consumer's ability to understand the marketing messages and assign them value and meaning. -Value and meaning always together. -The value and meaning assigned is largely determined by internal factors, (thoughts, feelings, emotion, attitude, perception, motivation, personality, lifestyle) which are different for each consumer.

-For example, a consumer who drinks lots of milk, sees an advertisement that says "Get Milk?" and since they already have positive feelings for the product they will purchase more milk, whereas a consumer who does not enjoy drinking milk and sees the same ad, may dismiss the ad or may try drinking more milk for a short period of time and then decrease consumption again.

Consumer behaviour

Internal Influences – Memory

Three things influence consumer's ability to understand messages:

Physical Characteristics of message

Imagery: When the brand name, words, and slogan work together to create an image in the mind of the consumer, it will invoke ideas, feelings and objects, and a direct recovery of past experiences. Disney is big on evoking nostalgia and past experiences, they want adult customers to remember being taken to the Disney parks as a child and then repeat the experiences with their own children. Much of their advertisement depicts families having wonderful experiences together, while the adults are remembering being there as children.

Color: Colors have an enormous impact on marketing messages, and color affects consumers in a subjective manner, so that most of the time consumers don’t even know they are being affected! For example, in the US, the color red makes people eat 25% more, therefore most restaurants use red as their main color. ( Home :: McDonalds.com ; Welcome to KFC.com ; Jack in the Box – Home ).The meaning and value assigned to colors changes with the culture, so marketers need to be fully aware of how color is interpreted by different groups of people. For example, the Starbucks Coffee Company logo is green, but when they opened shops in Malaysia, they had to change the logo to brown because in that culture green is associated with sickness.

Font: The presentation of words and how they are shaped will also enhance the marketing message and contribute to the value and meaning. For example, these two different fonts for a cigarette company will convey entirely different meanings, and may attract two different customers.

Caribou CigarettesCaribou Cigarettes

-The first logo is block style, bold and more intense and may be more masculine. The second is a script font, with more curls, softer lines and may be more feminine. -So which is better? Well, that depends on the product and the target market you are trying to attract.

Consumer behaviour

Internal Influences – Memory

-Simplicity of the message: A simple message is generally easier to understand. Using short phrases and easy to read terminology, such as “heart healthy” will quickly and easily convey the message that the product is good for your heart. ( Aceite Capullo )

-Consistency of the message: The message needs to fit in with the surrounding information—style, color, text, photographs, music—all have to work together. For example, showing a television ad for travel to the Caribbean will have soft, flowing fonts, bright colors, and reggae music. It can sometimes be an advantage to have inconsistent messages, some consumers may remember the ad more if some of the elements don’t make sense.

-Source of the message: Consumers will be more likely to remember and purchase products endorsed by credible sources, animated characters or celebrities. They have to be likeable, have some expertise or at least pretend that they have expertise), be trustworthy, and attractive.

Consumer behaviour

Internal Influences – Memory

Characteristics of the message receiver (consumer)

-Intelligence: unless you are specifically marketing a product to extremely intelligent individuals, it is best to word marketing messages on a level most people can understand, and don’t ever talk to your customers in a way that would make them feel inferior.

-Involvement: A customer with higher levels of involvement with the product, service and marketing information will have more recall than a consumer with less involvement. Creating more interest in the product and making a website more interactive will help to increase sales. More involvement means more sales.

-Familiarity: Generally, the more familiar a customer is with a product, the more likely they are to purchase it; however, having too much familiarity can lead to adaptation, when customers become tired of their “familiar” purchases and seek out novelty items. For example, in the US in the 1990s, ketchup sales began slipping and to revamp sales, ketchup manufacturers created green and purple ketchup, these novelty items boosted sales, but only for a few months, when consumers became tired of them.

-Expectations: If the customer doesn’t know what to expect from the product or service, then they are not going to purchase it. This explains why familiar brand names like Campbell’s Soup, Coca-Cola and Disney do not change their logos—customers are familiar with them, have positive thoughts about them and know what to expect.

-Physical limits: Marketers need to remember that some consumers have limitations such as hearing impairment or color blindness and this needs to be taken into consideration when creating marketing messages

Consumer behaviour

Internal Influences – Memory

Characteristics of the environment

-Intensity of information: If a consumer is overloaded with stimuli in an environment, they are much more likely to avoid the ad, or not comprehend it at all.

Let's face it, we live in a world cluttered with advertisements, it can be difficult to break through all of it and get to your target market customers. Marketers have to be more creative since customers can now skip commercials (thanks to recordable television); marketers use product placement in the actual movie or television show, the characters in the show use the brand name products and may even talk about how they like the brand name. This is all part of the advertising. Marketers are also making use of new social marketing movements such as Twitter and Facebook that can be programmed to reach customers that want to see your marketing messages.

-Framing: Messages can be framed to seem positive or negative and this will affect how customers assign value. "If you don't use sunscreen, you could get skin cancer" or "Use sunscreen to moisturize and protect your delicate skin".

-Timing: Many factors will influence how a message is interpreted and assigned value including: amount of time customer has to view a message, time of day, and type of medium used. A customer driving in the morning 70mph past a billboard for coffee may only have a few seconds to interpret the message, but since it is a time of day when that product is most consumed, they may be more likely to act on the message.

Consumer behaviour

Internal Influences - Emotion and Perception

A. Emotion

-Emotion is difficult to define, and even more difficult to predict. -However, they are important to marketers because consumers tend to react to marketing messages and make purchases based on feelings and emotions. -Emotion can be used to create product benefits. -Such as with Cheerios cereal; its commercials feature families having wonderful moments together, that couldn't have happened without those products. -Emotion in advertising enhances attention, attraction, and is processed more by the consumer and may be remembered better.

-These are elements of the relationship between emotion and understanding:-Self control- the ability to control your emotions -Emotional empathy- the ability to understand other people's emotions -Positive/negative outlook- a person's outlook on life can be optimistic or depressed and negative; most people fall somewhere in between--Productivity- ability to use emotions to solve problems

Consumer behaviour

Internal Influences - Emotion and Perception

B. Perception

-Perception is the process by which people select, organize, and interpret information.-Perception has four major steps:1. Exposure - When a stimulus (like a billboard) comes within range of your senses (vision)2. Attention - Determined by the individual and the situation; Nerves pass the information onto the brain for processing3. Interpretation - when marketing messages are assigned meaning4. Memory: a. Short-term—for immediate decision making b. Long-term—for retention

Consumer behaviour

Internal Influences - Motivation

-Motivation is an internal state that drives us to satisfy needs. -Motivation is the energizing force that activates behavior. -Once we recognize that we have a need, a state of tension exists that drives the consumer to the goal of reducing this tension and eliminating the need. -Consequently, only unmet needs motivate

-According to Maslow's hierarchy of human needs, for each need there are positives gained and negatives that are avoided by meeting that particular set of needs. -Products that are purchased because of a need will satisfy a goal and avoid unwanted consequences. -For example, people need to feel secure so they purchase smoke detectors, therefore gaining protection and avoiding loss and fear of fire, only unmet needs motivate.

Consumer behaviour

Internal Influences - Motivation

Consumer behaviour

Need Gained Avoided

Self-Actualization Creativity, accomplishment Unfulfilled potential

Esteem Pride, recognition, prestige Failure, inadequacy

Social Acceptance, popularity

Rejection, embarrassment

Security Safety, protection Loss, danger, fear

Physiological Health, comfort Sickness, discomfort

Positives and Negatives for Each Need (Based on Maslow)

Internal Influences - Motivation

According to McGuire, there are 12 psychological motives, 12 reasons why consumers are motivated to make purchases:

1. Need for consistency 2. Need for attribute causation 3. Need to categorize 4. Need for cues 5. Need for independence 6. Need for self-expression 7. Need for ego-defense 8. Need for reinforcement 9. Need for affiliation 10. Need for modeling 11. Need for novelty 12 Need for Assertion

Consumer behaviour

Internal Influences - Motivation

1. Need for consistencyPeople have a basic desire to have all parts of themselves consistent and they purchase products that fulfill this need. People that listen to country music will purchase products like cowboy boots, heavy duty trucks and pets.

2. Need for attribute causationPeople have the need to determine who or what causes things to happen to them. Some people choose to attribute it to themselves, fate or an outside force like God.

3. Need to categorizeCategories allow people to process a large amount of information. Vehicles are categorized into cars, SUV's, light trucks, heavy duty trucks, van, sporty, mid-size, hybrid, electric and so on. This helps consumers quickly narrow down their choices when purchasing a vehicle.

4. Need for cuesMost people will view others' behavior and infer what they feel and think. Clothing plays an important role in presenting image of a person. People quickly judge others by the clothing they are wearing and the vehicle they drive.

Consumer behaviour

Internal Influences - Motivation

5. Need for independenceAmericans strive for individuality and self-expression and many products are marketed as "limited edition" or being different and unique The Japanese culture discourages individuality and focuses on affiliation, and behavior that enhances family and culture.

6. Need for self-expressionAmericans are known for letting others know who and what they are by their extravagant purchases, especially clothing and cars. Who really needs a $1,200 pen? What is that saying about that person?

7. Need for ego-defenseThe need to defend your identity. An insecure customer will purchase well-known brand names for fear of being labeled socially incorrect.

8. Need for reinforcementPeople are motivated to act because they are rewarded for doing it. For example, showing off a new diamond ring to your friends creates acceptance and approval.

Consumer behaviour

Internal Influences - Motivation

9. Need for affiliationAffiliation is the need to develop mutually helpful and satisfying relationships with others, which is a critical part of all people's lives.

10. Need for modelingConformity and the need to base behavior on that of others. This is the major motivation of children, tweens (8-12 year olds), and especially teenagers-and in their social world conformity mean acceptance.

11. Need for noveltyPeople have variety seeking-behavior and this may be a reason for brand switching and impulse buys, but that depends on the person. People experiencing rapid life changes will seek stability, while people in stable life situations will seek change. The travel industry uses this by changing up their ads and showing adventure vacations where people are actively having fun and some ads showing relaxing vacations where people are swinging in a hammock.

12. Need for AssertionCustomer's need to engage in activities that will increase self-esteem and self-esteem in the eyes of others. Most consumers respond positively to ads that appeal to this need. In an advertisement for a ladies razor, it will say "show off your beautiful legs to your man," this will appeal to women by showing that the product increases your self-esteem.

Consumer behaviour

Internal Influences - Lifestyle and Attitude

A. Lifestyle

-Lifestyle is a common word to explain complicated consumer behaviors. Lifestyle is a way to segment people into groups based on three things: opinions, attitudes and activities. -Lifestyle means the ways groups of consumers spend time and money. -Lifestyle can include things like bowling, cooking, car racing, kayaking, attending charity events, having pets, interest in politics, watching sporting events and so on

Consumer behaviour

Internal Influences - Lifestyle and Attitude

A. Lifestyle

-Lifestyle is a common word to explain complicated consumer behaviors. Lifestyle is a way to segment people into groups based on three things: opinions, attitudes and activities. -Lifestyle means the ways groups of consumers spend time and money. -Lifestyle can include things like bowling, cooking, car racing, kayaking, attending charity events, having pets, interest in politics, watching sporting events and so on.

-Everyone has two lifestyles-the one they are currently in and the one they want to be in, which is always better than the current one. -Marketers exploit this desire to move into a better lifestyle by showcasing people who are better off than the intended target market in their ads. -For example most ads targeting children show children that are almost too old for the product, this appeals to younger children who desire to be like them.

Consumer behaviour

Internal Influences - Lifestyle and Attitude

B. Attitude

-An attitude is an internal evaluation, expressed outwardly about a person, object or issue. -There are three components of attitude - affect, behavior and cognition. -This is sometimes called the ABC's of attitude. -These three components work together to form a hierarchy of effects:

Purchase Hierarchy of effectsHigh involvement Belief—affect—behavior Low involvement Belief—behavior—affect Experiential Affect—behavior—belief Behavioral Influence Behavior—belief—affect

-In a purchase that requires a high level of involvement, such as a car, consumers will consider various choices and develop beliefs about each choice; then they develop feelings about the products (affect); and finally they act on the behavior and decide to purchase, or not. -Whereas with a behavioral influence, the customer will act first (purchase), then develop beliefs about their purchase and that leads to developing feelings about the product or service.

Consumer behaviour

Internal Influences - Lifestyle and Attitude

ELM Model (Petty and Cacioppo, 1981)One theory about attitude change is the Elaboration Likelihood Model (ELM). This model shows how attitudes are changed based on the level of involvement in the purchase. As soon as a message is received a consumer begins to process it, depending on the level of involvement and motivation it will then follow one of two routes—the central route or the peripheral route.

The central route: If the consumer is highly involved in the purchase, then they will put forth considerable effort toward understanding the marketing messages. They will look for cues in the message that pertain to the product, its attributes, and advantages.

The peripheral route: If the consumer is not highly involved in the purchase, or lacks the motivation to process information, they are more likely to pay attention to the attractiveness of the people in the advertisement, images and music, which are all non-product related information. These cues play a major role in persuading consumers to purchase. This usually leads to a product attitude change that doesn’t last.

Consumer behaviour

External influences - Introduction

What are external influences in consumer behavior?

-What a consumer eats, wears, and believes are all learned and influenced by the culture they live in, their family, childhood and social environment. -All of these are external factors that affect purchases.

A list of the external influences that affect consumer behavior:Age Race Gender Education level Cross-cultural influences Sub-cultures (Hispanic-American) Social status (upper, middle, lower) Customs, Beliefs, Expectations, Traditions, Habits Reference groups are groups that have shared beliefs, interests and behaviors and influence a consumer’s behavior:

Consumer behaviour

External influences - Introduction

-People are social and they want to belong to special groups. -Group members share common interests, influence each other, and share rules and values. -Primary groups are those with the most influence, such as family members; secondary groups have less interaction than the primary group, such as clubs and organizations. -As children grow into teenagers, their parents become less of an influence and peer groups become more of an influence. -All groups exert what is called social power; some groups have more power than others over consumers’ decisions.

Consumer behaviour

External influences - Introduction

Consumer behaviour

Type of Social Power Description ExampleReferent A person likes a group and

acts like them so the group will accept them

A teenager wants to join a popular group, so they begin to dress like them and listen to their groups’ chosen music

Legitimate Membership comes with agreements and there will be consequences for nonconformity

A boss has authority over his employees and can fire them if they don’t do an adequate job

Expert Groups have knowledge that others want to gain

Consumers who want to be members of The American Medical Association seek to gain their knowledge of health and wellness

Reward Groups with power to give rewards to members

A school soccer team can give trophies to their best players (members)

Coercive A group can penalize members for not following the rules

In the army, soldiers who do not report for duty on time can be forced to do manual labor or even get kicked out of the army

External influences – Introduction

-External influences can also include situational influences, sometimes called atmospherics—sensory items in an environment that may change buying patterns, such as music, color, smell, and lighting. -If a store plays loud rock music, they may attract young adults, but drive away older consumers. Color is a huge influence on behavior, but is also dependent on culture, since different cultures perceive colors differently. In the US white is a color worn at weddings, and in China, red is the color of choice for weddings. Many bakeries will pump the smell of their treats outside the store, so that passersby will be more likely to want to come in.

-Before making a purchase, consumers will go through an external information search. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. It includes:Personal experience- have they purchased this product before? How do they feel about it? Websites/Internet search- researching the quality of the product Knowledge- someone with little or no knowledge of the product will need lots of informationFriends/reference groups- consumers ask friends, family and coworkers about their experiences with the product. Advertising and promotions-

-A purchase may be ultimately made due to Heuristics. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying, such as purchasing from specific countries of origin, or products that they are brand loyal to.

Consumer behaviour

External Influences - Family Life Cycle (FLC)

-Family life cycle is defined as what type of family the target market consumer is in. -DINKS are “double income no kids” and SINKS are “single income no kids”. -Marketers love to target the DINKS and SINKS because they have lots of discretionary income and no children to spend it on, so they spend their extra money on themselves, their house, their pets and vacations.

Stages of the Family Life Cycle (FLC)-Young and single -Engaged couples -DINKS (Double Income No Kids) -SINKS (Single Income No Kids) -Married with children: Babies, Toddlers, Elementary School Age (5-7), Tweens (8-12), Teens (13-17), Older -Single parents -Empty nester -Boomerang Kids (adult children who have moved back in with their parents) -Extended parents (grandparents raising their grandchildren) -Blended Families (stepchildren) -Recently divorced -Same-sex singles/couples -Retired - Wealthy or Medicare dependent

The engaged couples and the recently divorced spend money on similar products, although for different reasons. Engaged couples are buying products to begin a life together and the recently divorced are buying products that they already had and now need to replace. Extended parents are grandparents taking care of their grandchildren. Same sex couples and singles are grouped together whether they have children or not, because of their lifestyle and interests. An empty nester is someone whose children are now grown adults and have moved out of the house. Boomerang kids are adult children who are living with their parents.

Consumer behaviour

External Influences - Consumer Culture

-Culture includes knowledge, belief, art, law, morals, customs, and any other capabilities and habits acquired by humans as members of society.

-How does culture affect consumer behavior? Whatever a person consumes will determine their level of acceptance in their society. If someone does not act consistently with cultural expectations, they risk not being accepted in society.

-What happens when a company ignores culture? McDonald’s is one of the most popular restaurants in the world. At their American based restaurants they serve beef hamburgers, but when they decided to open restaurants in India, they used lamb meat for their hamburgers, because the Indian people do not eat cow meat; if McDonald’s had ignored this cultural difference they would not have been successful in India! That was the problem when The Walt Disney Company opened EuroDisney outside Paris; it was almost a failure because Disney ignored the culture. The French people drink wine at very young ages and prefer sugar on their popcorn, not salt, like Americans. Disney did not accommodate their theme park until they realized that the French people were indeed their target market, so they changed the name of the park to Disneyland Paris and made modifications to their menus and also to the wait lines in the park.

Consumer behaviour

External Influences - Consumer Culture

Consumer behaviour

Behavior Meaning in the US Meaning in other cultures

Consuming wine and beer

Those under the age of 21 are not allowed to drink alcohol

In European countries it is common for children to drink wine/beer at family meals; when in a bar in Korea you pour drinks for your friends and family first, then wait for them to pour your drink

Drinking coffee Generally adults drink it in the morning because of the caffeine, and giving coffee to a child is not accepted

In Turkey, coffee is a special drink that you serve to guests; in Italy coffee is enjoyed after a family meal; in China tea is the drink of choice

Cooking pork ribs Grilled outside at a backyard party

Jewish and Muslims do not eat pork

Kissing To express romantic feelings about someone

In many cultures kissing is acceptable when greeting a friend

Using the number 7 Lucky number Unlucky number in Kenya, Singapore and Ghana

External Influences - Consumer Culture

-Factors that Define a Culture:

i. Individual/Collective: The culture in the US is an individualistic society, where people generally look out for themselves; The Japanese culture focuses on the collective, and people work to better society as a whole.

ii. Extended/Limited Family: In the US, families move away from each other and generally don’t live together in the same house; In many Asian and European countries, parents, kids, grandparents and even aunts and uncles live together in the same house.

iii. Adult/Child: Different cultures will define when someone is an adult. In the US it is 18 years old, but in some South American countries it is 14 or 15 years old. In the Hebrew culture a boy becomes a man at 13 during his Bar Mitzvah ceremony. In the Hispanic culture a girl becomes an adult at 15th birthday party.

iv. Masculine/Feminine: Cultures define the roles of men and women differently, including their rank, and prestige in society.

v. Youth/Age: The value placed on Elders depends on the culture

vi. Cleanliness: In the US, cleanliness is very important, in fact most of the products advertised on American TV claim to improve cleaning; In other cultures showering on a daily basis is unnecessary.

vii. Tradition/Change: Some societies prefer traditions over making changes.

viii. Hard work/Leisure: In some cultures hard work is valued over leisure time.

ix. Sensual gratification/Abstinence: The Netherlands is a society that openly talks about and advertises sexual activity; in Muslim societies those topics are taboo, and women who get pregnant before marriage are often shunned.

Consumer behaviour

External Influences - Social Environment and Social Class

Social Environment

Reference groups have an influence on purchasing behavior, but the level of influence will depend on where the product will be consumed—in public or in private—and whether the product is a want or a need.

Consumer behaviour

GROUP INFLUENCE ON PRODUCT AND BRAND SELECTION

  Need Want

Public Example: fast food lunchA product used in public that you need weak group influence for product selection, strong group influence for brand selection

Example: yachtA product used in public that you want strong group influence for product selection, strong group influence for brand selection

Private Example: bed sheetsA product used in private that you need weak group influence for product selection, weak group influence for brand selection

Example: hot tubA product used in private that you want strong group influence for product selection, weak group influence for brand selection

External Influences - Social Environment and Social Class

Social Class

Populations can be subdivided into groups who members share similar hobbies, opinions, and activities. In general, people have two lifestyles—the one they are in and the one they strive to be in, which is usually better than their current situation. It is important for a marketer to understand the subdivisions of society in order to better choose target markets for their products and services.

Consumer behaviour

External Influences - Social Environment and Social Class

Social Class

Consumer behaviourPROFILE OF THE AMERICAN CLASS STRUCTURE

CLASS % Pop INCOME EDUCATION LEVEL

OCCUPATION DESCRIPTION

Upper-Upper .3% $5 million and up

Graduate Degree

CEO, Executives, Senator

Inherited wealth, aristocratic, fund charities, “old money”, participate in politics

Upper 1.2 $2 million Graduate Degree

Executive, professional

Entrepreneurs, Sports Stars, Entertainers

Lower-Upper 12.5 $250,000 Graduate Degree, medical degree

Executive, Professional, Doctor

Education is important, involved in arts

Middle Class 32 $100,000 College Degree Office workers, managers

Insecure due to economic fluctuations, live in the suburbs

Working Class 38 $50,000 High school Teacher, plumber,

Skilled workers, may be in danger of falling into a lower class

Lower 9 $20,000 Some High School

Janitor, farmer Poorly educated, low income, work as laborers

Lower-Lower 7 $9,000 and under

Grade School Minimum wage or unemployed

Unskilled, may be unemployed for long periods of time, receive government support

External Influences - Social Environment and Social Class

Social Class

Consumer behaviourPROFILE OF THE MEXICAN CLASS STRUCTURE

CLASS % Pop DESCRIPTIONA (muy rica y bien acomodada)

0.6% Muy altos ingresos; médicos, abogados, políticos, funcionarios de gobierno, presidentes de la república (medio millón o más USD)

B (clase rica) 1.93% Altos ingresos, $100,000 a 400,000 USD

C1 (clase alta)

18.54%

Profesionistas con ingresos fuertes (50,000 a 90,000 USD)

C2 (clase media alta) Tienen ingresos mensuales de 20,000 a 40,000 USD. Alto poder adquisitivo; puestos de altos ejecutivos y directivos.

D (clase media media) 27.23% Ingreso mensual de 10,000 a 19,000 USD; casas de lujo ejecutivas de alto poder adquisitivo.

E (clase media baja) 21.42% Ingresos mensuales de 1,000 a 9,000 USD; poder adquisitivo mediano.

F (clase popular) 30.28% De 100 a 300 USD mensuales; para muchos países de AL; la mayoría de la población se encuentra en este nivel

External Influences - Family Influences (Birth Order)

-Where a child places in the birth order can have an effect on how they see themselves, and therefore affects their consumer behavior.

-The middle child often seems to have the most negative impressions of his lot in life.

-Younger children always want to be able to do the things older brothers are allowed to do.

-And older brothers may feel that the younger ones get away with things they were not able to do when they were the same age. Here are the levels of birth order:

(1) Only Child

-Pampered and spoiled

-Is center of attention; often enjoys position. May feel special.

-Relies on service from others rather than own efforts.

-Feels unfairly treated when doesn't get own way.

-Likelier to hold a professional position.

-Concerned with meeting parents’ expectations.

-Confident.

-Pays Attention to Detail.

-Good in School.

-Overly Critical.

Consumer behaviour

External Influences - Family Influences (Birth Order)

(2) Oldest Child

-Is only child for period of time; used to being center of attention.

-Believes must gain and hold superiority over other children.

-Being right, controlling often important.

-Strives to keep or regain parents' attention through conformity.  If this failed, chooses to misbehave.

-May develop competent, responsible behavior or become very discouraged.

-Sometime strives to protect and help others.

-Confident and determined.

-Born Leader and organized.

-Eager to Please.

-Likes to Avoid Trouble.

(3) Second Oldest Child

-Never has parents' undivided attention.

-Always has sibling ahead who's more advanced.

-Acts as if in race, trying to catch up or overtake first child. If first child is "good," second may become "bad." Develops abilities first child doesn't exhibit. If first child successful, may feel uncertain of self and abilities.

-May be rebel.

-Feels "squeezed" if third child is born.

-May push down other brothers.

Consumer behaviour

External Influences - Family Influences (Birth Order)

(4) Middle Child of Three brothers

-Has neither the rights of oldest nor privileges of youngest.

-May feel like they don’t have place in family.

-Becomes discouraged and "problem child" or elevates self by pushing down other brothers.

-Is adaptable.

-Learns to deal with both oldest and youngest brothers.

(5) Youngest Sibling

-Feels every one bigger and more capable.

-Expects others to do things, make decisions, take responsibility.

-Becomes boss of family in getting service and own way.

-Develops feelings of inferiority or becomes "speeder" and overtakes older siblings.

-Remains "The Baby." Places others in service.

I-f youngest of three, often allies with oldest child against middle child.

-Persistent and affectionate

-Crave the Spotlight

Consumer behaviour

‘The decision-making process by which formal organisations establish the need for

purchased products and services, and identify, evaluate, and choose among

alternative brands and suppliers’

Kotler and Armstrong (1989)

Organisational Buyer Behaviour

-Organisation purpose- Goodyear Tyres-Derived demand- follows cars and lorries-Concentrated purchasing- stockholdings of rubber-Direct dealings- large purchaser of basic rubber - no intermediaries-Specialist activities- learns about the product-Multiple purchase influences- DMU - Decision making unit

Characteristics of organisational buyer behaviour

Organizational Buying Process

1. Problem Recognition

2. General Description

of Need

3. ProductSpecifications

4. Supplier Search

5. Acquisitionand Analysisof Proposals

6. Supplier Selection

7. Selectionof

Order Routine

8. PerformanceReview

Characteristics of organisational buyer behaviour

Buying a Machine Vision System (example):

Characteristics of organisational buyer behaviour

Characteristics of organisational buyer behaviour

A projected change in business conditions can drastically alter buying plan.

EnvironmentalForces

OrganizationalForces

GroupForces

IndividualForces

OrganizationalBuying

Behavior

•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 buyingdecision participants

•Job function, pastexperience, and buyingmotives of individualdecision participants