unit 4 consumer_decision_making

CONSUMER DECISION MAKING

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unit 3

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Analyzing Consumer Markets and Buying Behavior

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Know customers is never simple

They change in the last minute

Say one thing; do another

Companies profit from understanding how and why customers buy

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Introduction 3

Consumer behavior involves the acts of individual in obtaining, using and disposing of economic goods and services.

Behavior of individual includes the decision steps that precede and determines theses acts.

How consumers around the world make their choices among products embraces a fascinating array of factors.

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What is Consumer behavior?the study of

how individuals, groups and organizationsselect, buy, use and dispose of

goods, services, ideas or experiencesto satisfy their needs and wants

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Factors Affecting Buyer Behavior.

5a) Cultural.- set of basic values, perceptions, wants, and behaviors learned by a

member of society, from family and other important institutions.

Subculture: - A group of people with shared value system based on common life

experiences and situations. - Eg: nationalities, religions, racial groups and geographic.

Social class:- Permanents and ordered division in society whose members share

similar values, interest, and behavior.- Distinct brand preference such as clothing, home furnishing,

automobiles etc.

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Factors Affecting Buyer Behavior.6

UPPER CLASS- upper-upper: inherited wealth- lower uppers:

MIDDLE CLASS- upper middles: professionals , businessman who possess neither family status nor unusual wealth- middle class: average pay white collar and blue collar worker

WORKING CLASS- heavily depends for economic and emotionals support

LOWER CLASS- Upper lowers: working poor. Lack of education. Poorly paid for

unskilled work.- Lower-lowers: unskilled laborer. Often out of work.

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b) Social. Social factors includes family and groups.1. Family is the most important determinant of

consumer behavior because of the close, continuing interactions among family members.

2. Groups refers to 2 or more people who interact to accomplish individuals or mutual goals. eg: Opinion leader - reference group with special skills, knowledge, personality, or other characteristics, exerts social influence on others.

3. Roles and status: roles consist of activities people are expected to perform around them.

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c) Personal.1. Age and family life cycle stage.

Consumer purchases of goods/services change through their lifetime. Taste in food, clothing, recreation are often related to age.

Buying is also affected by the life cycle stage or phase that the family is in.

Husband and wife involvement

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2. Occupation. A person’s job or career affects his choices of

products/services. A blue collar worker buys more casual work clothes whereas a professional spends more on suits or high priced/ quality work wear.

3. Lifestyle. Lifestyle is a person’s pattern of living as expressed

in his or her attitudes / opinion / activities. Customer don’t just buy product , but buy the value

and lifestyle those product represent. Involves measuring AIO dimension: activities

(work, hobbies) interest, (food, fashion) opinion (social issues, product).

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4. Economic situation- Marketers watch trends in personal

income, savings, and interest rate. - Recession: redesign, reposition, and re-

price the products.

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d) Psychological factors.Influence by 4 major psychological factor.

1) Motivation – consumers are motivated to buy goods and

services to satisfy their needs. Motivation of consumers can be explained by using

Maslow’s hierarchy of needs.

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Maslow’s Hierarchy of Needs12Five levels of needs

1. Physiological – basic needs for food, clothing, shelter

2. Security / safety – protection against danger and uncertainty

3. Social – love and affection, sense of belonging to a group

4. Esteem – respect of others and self-esteem

5. Self-actualization / self-fulfillment – to be what one is capable of being

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Self Actualization Needs

Esteem Needs

Social Needs

Security Needs

Physiological Needs

Maslow’s Hierarchy of Needs

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Maslow’s Hierarchy of Needs

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As each need is satisfied, a higher need emerges.

When all other needs are met, employees will become motivated by self-actualization i.e. They will look for meaning and personal growth in their work, and seek new responsibilities.

Some employees meet their self-actualization need by producing work of high quality, creative ideas.

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2) Belief and Attitudes.Attitudes:- are a person’s enduring favorable or unfavorable

evaluations, emotional feelings with regard to an object.

- They are formed over time and difficult to change.- Attitude towards religion, politics, clothes, music,

food, etc. - Marketer normally try to adjust the attitude, not

to change the attitude.

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Beliefs:- descriptive thought that a person has

about something – based on knowledge, opinion or faith.

- If some of the beliefs are wrong and prevent purchase, the marketer will want to launch a campaign to correct them.

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3) Learning. Learning refers to the changes in an individual’s

behavior arising from experience (satisfaction or dissatisfaction).

Occurs through interplay of drives, stimuli, cues, responses and reinforcement.

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184) Perception

- The process by which people select, organize, and interprets information to form a meaningful picture of the world.

- Different people with different interpretation via 5 senses: sight, hearing, smell, and taste.

- Marketer’s must work hard to get their messages through.

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Consumer Buying Roles.19

Marketers need to know what people are involved in the

buying decision and the role that each one plays.

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Buying Decision Process.20

Consumers go thru many stages in the process of purchasing a product/service.

a) Problem recognition.• Consumer first identifies the need for a

particular product/service/hunger/thirst

b) Information Search.• Gathers information on how to satisfy need.• Sources of information: personal (family,

friends), commercials(advertising, salespeople), public (internet, mass media), experiential (examining, using the products)

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c) Evaluation of alternatives.• Uses a set of criteria to evaluate alternatives identified

during the search process.• Depends on individual consumer and the specific buying

situation. Eg: Careful calculation/logical thinking/ little or no evaluation etc.

d) Purchase decision.• The end result of the search and evaluation is the actual

purchase of the product/service.• The consumer now decides where, how and when to

purchase.• 2 factors influenced: attitude of others and unexpected

situational factors.

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d) Post-purchase behavior.• Relationship between consumer

expectation and product perceive performance.

• Consumers experience some post-purchase anxieties, called cognitive dissonance. Marketers can help to reduce this anxiety.

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BUSINESS MARKET23

Business market includes firms that buy goods and services in order to produce products and services to sell to others.

Derived from the demands of consumer goods. Involves more decision participants, and more

professional purchasing experts. more formalised – eg : details product

specifications and written purchasing orders. Buyer and seller work closely to each others –

more dependent

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24 Straight Rebuy

This is a recurring purchase decision in which an item that has performed satisfactorily is bought again.

Modified Rebuy In this situation, the buyer will re-evaluate

his available options. The buyer may look for new suppliers or make changes to the product purchased.

New Task Buying This refers to first time or unique purchase

situations that require considerable effort on the decision maker’s part.

Major type of buying situations

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Users are people in the organization who actually use the product or service.

Influencers affect the buying decision, usually by helping define the specifications for what is bought. Eg: technical personnel

Buyers have formal authority and responsibility to select the supplier and negotiate the terms of the contract.

Deciders have the formal or informal power to select or approve the supplier that receives the contract.

Gatekeepers control the flow of information in the buying centre. Eg: technical personnel, secretaries.

Participants of Business Buying Process

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Business Buying Process.26

Problem recognitionGeneral need descriptionProduct SpecificationSupplier search.Proposal solicitationSupplier selectionOrder routine specificationPerformance review.

unit 4 consumer_decision_making

Education