consumer&business buying behavior
DESCRIPTION
For PGDM students of BK School of business management Nov 2011www.profmanishparihar.blogspot.comTRANSCRIPT
Consumer Behavior&
Business Buying Behavior
www.profmanishparihar.blogspot.com
Objectives of this module:
What are the underlying psychological processes in making a purchase?
How do consumers make purchasing decisions?
Basically: Why consumers behave the way they behave?
What Influences Consumer Behavior?
Cultural FactorsCultural Factors
Social FactorsSocial Factors
Personal FactorsPersonal Factors
What is Culture?
Culture is the fundamental determinant of a person’s wants and behaviors acquired
through socialization processes with family and other key institutions.
Subcultures
Nationalities Nationalities
ReligionsReligions
Racial groupsRacial groups
Geographic regionsGeographic regions
Social Classes
Upper uppersLower uppersUpper middlesMiddle class
Working classUpper lowersLower lowers
Characteristics of Social Classes
Within a class, people tend to behave alikeSocial class conveys perceptions of
inferior or superior positionClass may be indicated by a cluster of
variables (occupation, income, wealth)Class designation is mobile over time
Social Factors
Referencegroups
Social roles
Statuses
Family
Reference Groups
Membership groupsMembership groups
Primary groupsPrimary groups
Secondary groupsSecondary groups
Aspirational groupsAspirational groups
Dissociative groupsDissociative groups
Roles and Status
What degree of status is associated with various occupational roles?
Personal Factors
Age
Values
Life cyclestage
Occupation
Personality
Self-concept
Wealth
Lifestyle
The Family Life Cycle
Brand Personality
SinceritySincerity
ExcitementExcitement
CompetenceCompetence
SophisticationSophistication
RuggednessRuggedness
Lifestyle Influences
Multi-tasking
Time-starved
Money-constrained
Faysal Bank of Pakistan has extended banking hours for time-pressed executives.
VERY IMPORTANT: Model of Consumer Behavior
Key Psychological Processes
Motivation
MemoryLearning
Perception
Motivation
Freud’sTheory
Behavioris guided by subconsciousmotivations
Maslow’sHierarchyof Needs
Behavioris driven by the lowest, unmet need
Herzberg’sTwo-Factor
Theory
Behavior isguided by motivating
and hygienefactors
Maslow’s Hierarchy of Needs
Herzberg’s Two-Factor Theory
Perception
Selective Attention
Subliminal Perception
Selective Retention
Selective Distortion
VERY IMPORTANT Consumer Buying Process
Problem Recognition
Information Search
Evaluation
Purchase Decision
PostpurchaseBehavior
Sources of Information
Personal
ExperientialPublic
Commercial
Successive Sets Involved in Consumer Decision Making
Stages between Evaluation of Alternatives and Purchase
Perceived Risk
FunctionalFunctional
PhysicalPhysical
FinancialFinancial
SocialSocial
PsychologicalPsychological
TimeTime
How Customers Use and Dispose of Products
Mental Accounting
Consumers tend to…Segregate gainsIntegrate lossesIntegrate smaller losses with larger gainsSegregate small gains from large losses
Just as consumers undergo several processes in purchase decisions, so do businesses..
Hence we also have to study the B2B i.e. Business Buying Behavior…
30
Business Markets and Business Markets and Business Buyer BehaviorBusiness Buyer Behavior
Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process
4. Compare the institutional and government markets and explain how they make their buying decisions
UPS – A typical seller of business solutions
Customer Needs
Consumers need fast, friendly, low-cost package delivery
Business needs are more complex Shipping part of complex
logistics process including purchasing, inventory, order status, invoices, payments, returns
Services
Its 360,000 people and 88,000 vehicles offer ground, air, freight worldwide
Helps customer navigate the complexities of international shipping
Offers a wide range of financial services
Provides consulting services to improve logistics operations
DefinitionBusiness Buyer Behavior:
The buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
Also included are retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them to others at a profit.
Goal 1: Define the business market
Sales in the business market far exceed sales in consumer markets.
Business markets differ from consumer markets in many ways.
Marketing structure and demand Nature of the buying unit Types of decisions and the decision process
Characteristics of Business Markets
Goal 1: Define the business market
Business Markets
Compared to consumer markets: Business markets
have fewer but larger customers
Business customers are more
geographically concentrated
Demand is different Demand is derived Demand is price
inelastic Demand fluctuates more
CharacteristicsCharacteristics
Goal 1: Define the business market
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Business Markets
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Compared to consumer purchases: Involve more buyers in
the decision process More professional
purchasing effort
CharacteristicsCharacteristics
Goal 1: Define the business market
Business Markets
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Compared to consumer purchases
More complex buying decisions
The buying process is more formalized
Buyers and sellers work more closely together and build long-term relationships
Goal 1: Define the business market
CharacteristicsCharacteristics
Major Types of Buying Situations Straight rebuy
Reordering without modification Modified rebuy
Requires modification to prior purchase New task
First-time purchase
Business Buyer Behavior
Goal 1: Define the business market
Business Buyer Behavior
Systems Selling Buying a packaged solution to a problem from a
single seller. Often a key marketing strategy for businesses
seeking to win and hold accounts.
Goal 1: Define the business market
Business Buyer Behavior
Buying Center The decision-making unit of a buying
organization Includes all individuals and units that participate
in the decision making
Goal 1: Define the business market
Members of the Buying Center
Business Buyer Behavior
UsersBuyers
InfluencersDeciders
Gatekeepers
Goal 1: Define the business market
Major Influences on Business Buyers
Environmental Organizational Interpersonal Individual
Economic trends Supply conditions Technological, political
and competitive changes Culture and customs
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Major Influences on Business Buyers
Environmental Organizational Interpersonal Individual
Objectives Policies Procedures Organizational
structure Systems
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Major Influences on Business Buyers
Influence of members in the buying center Authority Status Empathy Persuasiveness
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Environmental Organizational Interpersonal Individual
Major Influences on Business Buyers
Personal characteristics of members in the buying center Age and income Education Job position Personality Risk attitudes Buying styles
Key Factors Key Factors
Goal 2: Identify the major factors that influence business buyer behavior
Environmental Organizational Interpersonal Individual
Stages in the Business Buying ProcessStage 1: Problem RecognitionStage 2: General Need DescriptionStage 3: Product Specification
Value analysis helps to reduce costs
Stage 4: Supplier Search Supplier development
Goal 3: List and define the steps in the business buying decision process
Stage 5: Proposal SolicitationStage 6: Supplier SelectionStage 7: Order-Routine Specification
Blanket contracts are often used for maintenance, repair and operating items.
Stage 8: Performance Review
Stages in the Business Buying Process
Goal 3: List and define the steps in the business buying decision process
E-procurement is growing rapidly Online auctions and online trading exchanges (e-
marketplaces) account for much of the online purchasing activity
E-procurement offers many benefits: Access to new suppliers Lower purchasing costs Quicker order processing and delivery
Business Buying on the Internet - good book: “The world is flat” – Thomas Friedman
Goal 3: List and define the steps in the business buying decision process
Further reading recommended:
Philip KotlerLeon Schiffman
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