Lesson 5 Buying behavior of consumers and organizations

– Analyzing consumer and business markets

Consumers´ decision process and buying behavior

Types of consumers´purchasing decisions Nature of organizational markets (b2b

markets) and goods and services purchased

Organizational buying behavior

Consumer behaviour

study of how people buy, what they buy, when they buy and why they buy

it blends elements from psychology, sociology, sociopsychology, anthropology and economics

it attempts to understand the buyer decision processes/buyer decision making process

it studies characteristics of consumers such as demographics, psychology,...

The Consumer Buying Process

Consumer

Purchase Decisions

Product Choice

Location Choice

Brand Choice

Other Choices

Psychological Inputs

Culture

Attitude

Learning

Perception

Based on Cohen (1991)

Marketing Inputs

Product

Price

Promotion

Place

Demographic Factors

Age Stage in family life cycle (single, married, married with

children, „empty nest“, retired Occupation Economic circumstances Lifestyle social influence variables

family background reference groups roles and status

Reference groups/opinion leader reference group – people to whom an

individual looks when forming attitudes about a particular topic

opinion leader – a person who influences others (each social class and age group tends to have its own opinion leader)

culture – beliefs , attitudes and ways of doing things

Family as a Purchasing Unit

Úplné rodiny = mother-and-father families Neúplné rodiny = single parent families Nerodinné domácnosti = unmarried couples Domácnosti jednotlivců = singles

6-4

The PSSP Hierarchy of Needs

Physiological Needs

Safety Needs

Social Needs

PersonalNeeds

6-5

Drive

Cues

Response

Reinforcement

The Learning Process

Lifestyle Dimensions

OpinionsOpinions

InterestsInterests

ActivitiesActivities??????????????????????????????????????????????????????????????????????

6-6

Exhibit 6-6

6-7

Social Class Dimensions1.5%

32%

12.5%

38%

16%

Lower-middle class

Upper-middle class

Upper-class

Lower-lower class

Upper-lower (“working”) class

Purchase SituationSocial InfluencesPsychological

Variables

Need-want Awareness

Information Search

Set Criteria

Decide on Solution

Purchase Product

Routinized Response

Postpone Decision Postpurchase

EvaluationResponse

Feedback ofinformationas attitudes

Person making decision

Marketing mixes and other stimuli

The Consumer Problem Solving Process

Types of Buying Decisions

ComplexBuying

Behaviour

Dissonance-Reducing Buying

Behaviour

Variety-Seeking

Behaviour

HabitualBuying

Behaviour

HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

•Expensive•Risky•Infrequent•Self-Expressive

•Low cost•Low risk•Frequent

The Adoption ProcessAwareness

Interest

Evaluation

Trial

Decision

Confirmation

Adoption of InnovationsP

erce

nta

ge

of

Ad

op

ters

Time of AdoptionEarly Late

Inn

ova

tors

Early Adopters

Early Majority

2.5%

13.5%

34% 34%

16%

Laggards

Late Majority

Organisational Buyer 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

Few customers Big customers (size of contract) Strong relations in B2B B2B related to B2C Professional teams of negotiators

Innovation

Survival

Customer satisfaction

Growth

Profit

Other needs

Company’s Needs

Overlapin

Needs

Individual’s Needs

Risk

Job security

Comfort

Career advancement

Money-rewards

Other needs

Overlapping Needs

Buying Center

BuyingCenter

InfluencersEnd Users

Gatekeepers Deciders

Buyers

LittleSomeMuch

NoneSomeMuch

LittleSomeMuch

LittleMediumMuch

Information Needed

Review of Suppliers

Multiple Influences

Time Required

CharacteristicsNew-Task

BuyingModifiedRebuy

StraightRebuy

Type of Process

Organizational Buying Processes

Information sharing

Linkages

Cooperation

Legal bonds

Adaptations

RelationshipRelationshipSupplierSupplier CustomerCustomerSalesperson

QualityR&D

AccountingMarketing

Production

Purchasing manager

Quality

Finance

R&D

ProductionAccounting

Engineering

Buyer-Seller Relationships

Conclusions

Many variables influencing the behaviour of people

The sum of variables will result to a byuing decision

Most purchasing has several steps, begins with a need and finished with reconfirmation

Organizational behaviour is different as the motivation is different too