Chapter 5 Understanding Consumer and Business Buyer Behavior Friday February 12 2016 6 32 PM Consumer Markets and Consumer Buyer Behavior Consumer buyer behavior refers to the buying behavior of final consumers who are individuals and households that buy goods and services for personal consumption All of these final consumers combine to make up the consumer market Consumer buyer behavior Buying behavior of final consumers Consumer market Figure 5 1 Model of Buyer Behavior Stimulus Response Model All the individuals and households that buy or acquire goods and services for personal consumption Characteristics shape perception This figure shows that marketing and other stimuli enter the consumer s black box and produce certain responses Marketers must figure out what is in the buyer s black box The what where and when of consumer buying behavior can be measured But it s very difficult to figure out the whys of buying behavior That s why it s called the black box Marketers spend a lot of time and money trying to figure out what makes customers tick Figure 5 2 Factors Influencing Consumer Behavior Consumer purchases are influenced strongly by cultural social personal and psychological characteristics as shown in this figure Figure 5 5 Buyer Decision Process This figure shows that the buyer decision process consists of five stages The first stage is need recognition The need can be triggered by internal stimuli when one of the person s normal needs rises to a level high enough to become a drive A need can also be triggered by external stimuli The second stage is information search Consumers can obtain information from several sources like personal commercial public and experiential sources The third stage is the evaluation of alternatives that is how consumers process information to choose among alternative brands The fourth stage is purchase decision Two factors can come between the purchase intention and the purchase decision the attitudes of others and unexpected situational factors The last stage is post purchase behavior Determining if the consumer is satisfied or dissatisfied with the purchase lies in the relationship between the consumer s expectations and the product s perceived performance However all major purchases result in cognitive dissonance or discomfort caused by post purchase conflict Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption Adoption process is the mental process through which an individual passes from first learning about an innovation to final adoption Consumers go through five stages in the process of adopting a new product The first stage is awareness In this stage the consumer becomes aware of the new product but lacks information about it The second stage is interest which refers to the consumer seeking information about the new product The third stage is evaluation where the consumer considers whether trying the new product makes sense The fourth stage is trial In this stage the consumer tries the new product on a small scale to improve his or her estimate of its value The final stage is adoption where the consumer decides to make full and regular use of the new product Characteristics Influencing an Innovation s Rate of Adoption The characteristics of the new product affect its rate of adoption Relative advantage Compatibility the degree to which the innovation appears superior to existing products the degree to which the innovation fits the values and experiences of potential consumers Complexity Divisibility Communicability the degree to which the innovation is difficult to understand or use the degree to which the innovation may be tried on a limited basis the degree which the results of using the innovation can be observed or described to others Other characteristics that influence the rate of adoption include initial and ongoing costs risk and uncertainty and social approval Figure 5 6 Adopter Categories Based on Relative Time of Adoption of Innovations People can be classified into the adopter categories shown in this figure The curve illustrates that after a slow start an increasing number of people adopt the new product The five adopter groups have differing values Innovators try new ideas at some risk Early adopters are opinion leaders in their communities and adopt new ideas early but carefully Early mainstream adopters adopt new ideas before the average person Late mainstream adopters adopt an innovation only after a majority of people have tried it Lagging adopters adopt the innovation only when it has become something of a tradition itself B to B B to B buying behavior B to B buying process Purchased goods and services are used in the production of other products and services that are sold rented or supplied to others Determining which products and services an organization needs to purchase finding evaluating and choosing among alternative suppliers and brands Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold rented or supplied to others The business buying process is the decision process by which business buyers determine which products and services their organizations need to purchase and then find evaluate and choose among alternative suppliers and brands B to B Markets and Buying Behavior Fewer but larger buyers Derived demand for consumer goods Inelastic demand More participants professionals in the buying decision Bigger purchases technical and economic Longer and formal purchasing process Buyer and seller dependence Supplier networks relationships and reliability The business market is huge and involves more dollars and items than do consumer markets Business markets differ from consumer markets in terms of market structure and demand the nature of the buying unit and the types of decisions and the decision process involved Figure 5 7 A Model of Business Buying Behavior Buying Center This figure shows a model of business buyer behavior In this model marketing and other stimuli affect the buying organization and produce certain buyer responses To design effective marketing strategies marketers must understand what happens within the organization to turn stimuli into purchase responses All the individuals and units that play a role in the purchase decision making process Actual users of the product or service People who make the buying decision People and units influencing the buying