6 cb & org buying
Post on 20-Oct-2014
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cb & org buyingTRANSCRIPT
CONCEPTS IN MARKETING
Understanding Consumer Behavior & Organizational Behavior
WHY STUDY CONSUMER BEHAVIOR
Consumers make buying decisions all the time. The Marketing Task is to understand
• What do they buy … Product & Services• Where do they buy … Channel decisions• When do they buy … Timing of purchase• Why do they buy … Motivation to purchase• How do they buy … Decision process• How often do they buy … Purchase cycle
CONSUMER BEHAVIOR
• Consumer behavior can be defined as the behavior that consumers display in – searching for– Purchasing– Using– Evaluating and– Disposing off
products and services that they expect will satisfy their needs and wants.
CONSUMER BEHAVIOR & MARKETING PLANNING
• As marketers, it is important for us to recognize why and how individuals make their consumption decisions so that we can make better strategic decisions.
• Marketing firms use their knowledge of consumer behavior to segment markets, to design marketing strategies and to measure marketing performance.
THE BUYER : an Enigma
• The consumer buying decision remains an enigma for the marketer---sometimes responding the way the marketer wants/expects and on other occasions just refusing to buy the product from the same marketer.
• The marketer provides certain stimuli– Product, Price, Place & Promotion, but is unsure whether the buyer will respond.
• The consumers mind is another Black Box
THE BLACK BOX
Marketing Stimuli•Product•Price•Place•Promotion
Other Stimuli•Economic•Technological•Political•Cultural
BuyersCharacteristics
Buyers Decision Process Not to
Buy
Buy
Decision on•Product Choice•Brand•Dealer•Timing•QuantityResponse
Evaluate & takeCorrective action
FACTORS INFLUENCING CONSUMER BEHAVIOR
• Cultural : Culture, Sub-culture, Social class
• Social : Reference groups, family, roles & status
• Personal : Age & life cycle, Occupation, Lifestyle, Personality, Economic
• Psychological : Motivation, Perception, Learning, Beliefs & attitudes
Social class & typical consumption behaviorSocial class
Upper-Upper
Lower-Upper
Upper-Middle
Lower-Middle
Upper-Lower
Lower-Lower
Characteristics
Social elite, inheritance
High income professionals, social position earned
Career oriented professionals, highly educated
Respectable, hard working, conscious re standards
Blue collar, moderate education & skill
Near poverty line
Consumption behavior
Consume high quality often become standards for others
Conspicuous consumers of luxury products, innovators
Hi-quality products that reflect success & position, gracious life style, experimenters.
Influenced by standards, careful shoppers, price sensitive, home conscious
Impulsive, brand loyal, self perception
Unskilled shopper, purchase on credit & pays more
PSYCHOLOGICAL FACTORS
• Consumer buying choices are influenced by major psychological factors---motivation, perception, beliefs & attitudes
• Motive---is a need that is sufficiently pressing to drive the person to act
• Needs could be– Biological…arising from state of hunger,thirst or comfort– Psychological…arising from need recognition, esteem,
belonging
A need becomes a motive when it is aroused to a sufficient level of intensity.
Theories of Motivation
• Sigmund Freud Theory of Motivation• Maslow’s theory of Motivation
• Freud…suggests that a person does not fully understand his or her motivation
• E.g A consumer wanting to buy a Camera– Initial motive …..as a hobby or a career– Deeper level…….to impress others with creative talents– Still deeper level….to feel young & independent
• Maslow believes that human needs are arranged in a hierarchy, from the most pressing to the least pressing.
MASLOWS HIERARCHY OF NEEDS
Self Actualization
needs
Esteem Needs
Social needs
Safety needs
Physiological needs
Adapted from Principles of Marketing: Kotler & Armstrong. PHI, 9th edition
Self development& realisation
Self esteem, recognition status
sense of belonginglove
security,protection
hunger, thirst
THE BUYING DECISION PROCESS
• Buying roles -- who makes the buying decision Initiator, Influencer, Decider, Buyer, User
• Buying Decision behavior —buying decision varies with type of product
– Complex Buying behavior
• Buying Process -- how the decision is made
Need recognition
Search forinformation
Evaluation ofalternatives
Purchasedecision
Post purchasebehavior
TotalSet Aware-
nessSet
Consid-eration
SetChoice
Set Decision
Decision Making Sets
BUYING DECISION BEHAVIOR
High involvement Low involvement
Significant Difference Betweenbrands
Few differencesBetweenbrands
ComplexBuyingbehavior
Variety seekingBuyingbehavior
DissonanceReducingBuyingbehavior
Habitual Buyingbehavior
Complex buying behavior
Organizational Buying Behavior
Organizational Buying Behavior
• Business Markets…. all organizations that buy goods & services for use in the production of other products & services that are sold, rented or supplied to others.
• Business buying process….the decision making process by which business buyers establish the need for purchased products & services and identify, evaluate and choose among alternative brands & suppliers
Characteristics of Business Markets
• Demand Characteristics - derived demand - relatively inelastic
- erratic demand
• Market demographics - fewer but larger buyers- geographically
concentrated
• Buyer-Seller relationship - closer relationship- multiple buying influences- professional buyers buy- follow prescribed specifications/procedures
Industrial Marketing vs Consumer goods Marketing
Product
Price
Promotion
Distribution
Customer relationships
Decision making process
Industrial marketingMore tech in nature; accompanying services important; form may vary.
Competitive bidding for specific items; list prices for standard items
Personal selling
Shorter channels; more direct selling
Frequent & more enduring but complex
Involves diverse group of organizational members
Cons goods MarketingStandard form; service important but less.
List prices
Advertising
Long chain of intermediaries
Less frequent & shorter duration
Individual or household decides
Characteristics of Organizational Buying Process
OrganizationalBuying Process
Multiple buyinginfluence
Technicalcomplexities
Time lags
Rational & EmotionalBuying motives
Objectives &Distinctive character oforganization
Business Buyer Behavior
• What buying decisions do business buyers make ?
• Who participates in the buying process ?
• What are the major influences on buyers ?
• How do business buyers make their buying decisions ?
What buying decisions : Implications of Buying situations
Buying situation
Straight re-buy(no change in specs)
Modified re-buy(changes in specs/terms)
New Task(first time purchase)
IN Supplier
Maintain quality; be alert to changing customer needs;initiate auto ordering; reinforce relationships.
Respond quickly; reinforce relationships;preempt changes using CI
Equal opportunity for both; info need is high;seller can influence specs
OUT Supplier
Offer something new/diff;exploit dissatisfaction;get foot in the door;ask to split order
Opportunity to get in;offer alternatives; offer value addition;minimize risk of shifting
Buying motivations of Business buyers
Rational & emotional factors influence decisions
• Rational factors - Price…base price & price stability- Quality..reliability,consistency, quality-price relationship- Service…where intangibility high, scope for differentiation- Deliveries..continuity/reliability, may
not have exclusive suppliers- Reciprocity…”you buy from me, I buy
from you”
• Emotional factors - Status & reward…motives of individual- Perceived risk…fear of wrong decision—
displeasing boss or losing reward- Friendship/relationship…help a known
supplier by providing information
Forces influencing Organizational buying behavior
• Environmental forces - economic, political,& legal, cultural, physical & technological
- uncertainty makes decision making complex
• Organizational forces - Organizational climate & rules
- avoid uncertainty, role of purchase- centralized/decentralized, ripe for personal selling
• Group forces - group buying behavior-affected by influences of others,
- goal conflict amongst members
• Individual forces - Individuals not entities make buying decisions.
- personal biases affect decision making, - background of individuals affects
evaluation
Implications for Marketing Strategy planning
• Environmental - how will the environment impact purchase plans of the industry/organization
• Organizational - What unique company attributes (size, structure) influence buyer behavior
• Product specific - how far has the firm progressed in the buying process
- what is the likely buying situation- what is the extent of perceived risk
• Group - Group or individual decision, if group who are the members
- what is the relative influence of each
• Individual - what criteria are important to each member in evaluating suppliers
- how do buyers rate suppliers