Buyer Behavior

1. Buyer Behavior

2. Categories ofProducts & Markets • Products • Consumer Goods • Industrial Goods • Markets • Consumers (end users) • Industrial/Organizational Buyers

3. Consumer’s Role in Marketing Strategy and Planning • Customer needs and wants are the focus • Quality and service are critical • Leading through innovation is important • Recall the Customer Orientation??

4. Consumer’s Role in Marketing Strategy and Planning • Increased domestic and foreign competition • More efficient and effective marketing strategies can result • Examples • Why the heavy focus on the consumer??

5. Consumer’s Role in Marketing Strategy and Planning • The evidence is mixed • Current examples (Saturn vs. Snapple) • Evidence from marketing plans • Adaptiveness is a key (In Search of Excellence) • Sales and satisfaction figures may not be accurate indicators • Are companies measuring up?

6. Are Consumers Rational? • The study of consumer behavior evolved from economics • “Rational Man” theory at odds with consumer behavior • Numerous factors affect consumer behavior that are not accounted for by economic theories

7. Are Consumers Rational? Let’s Find Out

8. RIGHT SIDE Your about to buy a calculator at Store X for $40. A friend rushes in to tell you that the same calculator is only $20 at Store Y. Demonstration

9. LEFT SIDE Your about to buy a TV at Store X for $600. A friend rushes in to tell you the same TV is only $580 at Store Y. RIGHT SIDE Your about to buy a calculator at Store X for $40. A friend rushes in to tell you that the same calculator is only $20 at Store Y. Demonstration

10. Are Consumers Rational? • Copeland’s “rational” and “emotional” motivators • Rational/Functional Considerations • Emotional/Symbolic Considerations

11. A Model of Consumer Behavior

12. Psychological Influences

13. Consumer Needs &Wants • Needs and wants Motivate consumers • Wants are more specific than needs • Need transportation • Want • Do marketers create basic needs? • Do marketers create wants?

14. FIGURE 5-5 Hierarchy of needs Slide 5-23

15. Consumer Perception • Perception is selective

16. Advertisers’ Dilemma • U.S. consumers exposed to an average of _______ ads per day • Advertiser’s trying to change • beliefs • attitudes • behavior • Requires breaking through perceptual screens

17. Breaking Through the Clutter

18. BreakingThroughClutter • Make it Relevant & Interesting • Select Appropriate Appeals • Humor/Sex/Fear • Select Appropriate Executional Elements

19. Consumer Perception • Perception is selective • Only attend to a fraction of what we are exposed to • Perceptions can be biased

20. Perceptual Biases • Expectations bias perceptions • Perception of an experience altered by what we expect to experience • Setting proper expectations is critical

21. e k o C Brand Names Create Expectations • Coca Cola and New Coke • Implications for marketing research • Regular Bud Drinkers • The “Diet” Label

22. Advertising Creates Expectations • Ford and Quality • Dominos and Delivery • Van Heusen and Wrinkles

23. When Companies Set Expectations Too High • Disconfirmation leads to consumer dissatisfaction • Ads may be deemed deceptive by the FTC

24. Deceptive Advertising • Classic Examples • Categories of Deception

25. Consumer Attitudes • What are attitudes? • Enduring evaluations of objects/ideas/people • Can be positive, negative or neutral • Can be based on feelings and beliefs (affect and cognition)

26. Consumer Attitudes • Why are attitudes important? • Do attitudes always predict behavior?

27. Social Influences • Reference Groups • Word of Mouth • Family Influences

28. Word of Mouth • Exchange of product information and opinions between consumers • Consumer reliance on WOM often heavy • Content often negative

29. Coke’s Experience with WOM and Complaining • 12% told 20+ people about Coke’s response • If completely satisfied with response, told median of 5 others, and 10% of time increased Coke purchases • If dissatisfied with response, told median of 10 people, and about 75% of time reduced purchases or stopped buying

30. Family • Structure - Changing • Roles - Surprising • Children - Powerful

31. TraditionalFamily Life Cycle Young Single Newly Married Full Nest (I, II & III) Empty Nest (I & II) Sole Survivor

32. Family Life Cycle • Emerging Lifecycle Segments • Single parent households • ___% of households • Mostly ___________ • Older singles • Delay Marriage • Divorce • Married with no children • Unmarried couples

33. Family Life Cycle • Teens Role in Family Decision Making • Large segment (roughly 40 million) • $89 Billion Direct/ $200 Billion Total • 33% handle major shopping duties • Single parent households (25%) • Dual income households (75%) • Gillette’s Tag vs. Unilever’s Axe • Scion (late teen and early twenties)

34. Decision Making

35. FIGURE 5-1 Purchase decision process Slide 5-7

36. Low involvement Frequently purchased Inexpensive Little risk Little information High involvement Infrequently purchased Expensive High risk Much information desired Routinized Response Behavior Extensive Problem Solving Low involvement High involvement Levels of Decision Making Limited Problem Solving © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

37. Information Search • Information Search: Seeking Value • Internal Search • External Search • Personal Sources • Public Sources • Market-Dominated Sources Slide 5-8

38. Consideration Sets • Consideration sets are critical • Brands actually considered for final purchase • Size varies depending on the decision • How do companies influence the consideration set? • WOM and consideration sets

39. Alternative Evaluation • Extensive Problem Solving • Determine Important Evaluative Criteria • Gather Information • Make Evaluation

40. Brand Evaluation • Attribute Importance (Autos)

41. Important Features Brands Mileage Power Styling Price Nissan Saab Toyota Brand Evaluation Buying a Car 5 4 2 4 5 7 9 1 8 6 8 9

42. Brand Evaluation • Limited Problem Solving • Important evaluative criteria already known • Information on all but the new brands/models already gathered • Evaluation fairly simple comparison

43. Brand Evaluation • Routinized Response Behavior • Inexpensive/low risk/frequently purchased • Loyalty response • Loyalty vs. inertia

44. Organizationalvs.Consumer BuyingBehavior

45. Organizational Markets • Smaller number of customers • Larger purchase orders • Derived (vs. Primary) demand • Organizational buyers purchase inputs used in creating goods and services for final consumers

46. Organizational Buying • Buyers technically trained • Criteria explicit and needs specialized • Multiple buying influences • Multiple vendors used to reduce risk • Longer decision-making time frame • Greater importance of personal selling

47. Organizational Buyers • Industrial Markets • buyers who produce and sell other things • Kodak buys chemicals • Trade Industries • Companies that buy and resell • Wholesalers and Retailers • Government • federal, state, and local • e.g., national defense, public safety • Institutions • Universities, Hospitals

48. Organizational Buying Issues • Buying Centers • Buying Processes • Sourcing Decisions • Buyer-Seller Relationships

49. Buyers Buying Center Users Influencers Gatekeepers Deciders BuyingCenters

50. FIGURE 6-4Types of Organizational Buying Slide 6-26