Lesson 5 Buying behavior of consumers and organizations – Analyzing consumer and business markets

1. Lesson 5 Buying behavior of consumers and organizations – Analyzing consumer and business markets • Consumers´ decision process and buying behavior • Types of consumers´purchasing decisions • Nature of organizational markets (b2b markets) and goods and services purchased • Organizational buying behavior

2. Consumer behaviour • study of how people buy, what they buy, when they buy and why they buy • it blends elements from psychology, sociology, sociopsychology, anthropology and economics • it attempts to understand the buyer decision processes/buyer decision making process • it studies characteristics of consumers such as demographics, psychology,...

3. The Consumer Buying Process Marketing Inputs Product Price Promotion Place Purchase Decisions Product Choice Location Choice Brand Choice Other Choices Consumer Psychological Inputs Culture Attitude Learning Perception Based on Cohen (1991)

4. Demographic Factors • Age • Stage in family life cycle (single, married, married with children, „empty nest“, retired • Occupation • Economic circumstances • Lifestyle • social influence variables • family background • reference groups • roles and status

5. Reference groups/opinion leader • reference group – people to whom an individual looks when forming attitudes about a particular topic • opinion leader – a person who influences others (each social class and age group tends to have its own opinion leader) • culture – beliefs , attitudes and ways of doing things

6. Family as a Purchasing Unit • Úplné rodiny = mother-and-father families • Neúplné rodiny = single parent families • Nerodinné domácnosti = unmarried couples • Domácnosti jednotlivců = singles

7. Personal Needs Social Needs Safety Needs Physiological Needs The PSSP Hierarchy of Needs 6-4

8. Drive Cues Response Reinforcement The Learning Process 6-5

9. Activities ??????? ??????? ??????? ??????? ??????? Interests Opinions Lifestyle Dimensions 6-6

10. Upper-class 1.5% Upper-middle class 12.5% Lower-middle class 32% Upper-lower (“working”) class 38% 16% Lower-lower class Social Class Dimensions Exhibit 6-6 6-7

11. Marketing mixes and other stimuli Psychological Variables Social Influences Purchase Situation Person making decision Need-want Awareness Routinized Response Information Search Feedback of information as attitudes Set Criteria Decide on Solution Purchase Product Postpone Decision Postpurchase Evaluation Response The Consumer Problem Solving Process

12. High Involvement Low Involvement Complex Buying Behaviour Variety- Seeking Behaviour Significant differences between brands Dissonance- Reducing Buying Behaviour Habitual Buying Behaviour Few differences between brands Types of Buying Decisions • Expensive • Risky • Infrequent • Self-Expressive • Low cost • Low risk • Frequent

13. Awareness Interest Evaluation Trial Decision Confirmation The Adoption Process

14. Early Majority Late Majority Percentage of Adopters Early Adopters Innovators Laggards 34% 34% 16% 13.5% 2.5% Late Early Time of Adoption Adoption of Innovations

15. Organisational Buyer Behaviour ‘The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’ Kotler and Armstrong 1989

16. Few customers • Big customers (size of contract) • Strong relations in B2B • B2B related to B2C • Professional teams of negotiators

17. Risk Innovation Job security Survival Comfort Customer satisfaction Overlap in Needs Individual’s Needs Company’s Needs Career advancement Growth Money-rewards Profit Other needs Other needs Overlapping Needs

18. Buyers Buying Center End Users Influencers Gatekeepers Deciders Buying Center

19. Characteristics Type of Process New-Task Buying Modified Rebuy Straight Rebuy Time Required Much Medium Little Multiple Influences Much Some Little Review of Suppliers Much Some None Information Needed Much Some Little Organizational Buying Processes

20. Information sharing Linkages Finance R&D Cooperation Quality Quality R&D Salesperson Purchasing manager Supplier Relationship Customer Accounting Marketing Production Accounting Engineering Production Legal bonds Adaptations Buyer-Seller Relationships

21. Conclusions • Many variables influencing the behaviour of people • The sum of variables will result to a byuing decision • Most purchasing has several steps, begins with a need and finished with reconfirmation • Organizational behaviour is different as the motivation is different too