Topic 3 buyer behaviour 1 learning objectives1 Understand

Topic 3 buyer behaviour 1 -

learning objectives_1 • Understand the decision-making processes that consumers go through as they make a purchase • Appreciate how those processes differ between different buying situations 3 -2 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

learning objectives_2 • Understand the influences that affect decision-making, whether environmental, psychological or sociocultural • Appreciate the implications of those processes and influences for marketing strategies 3 -3 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

UNDERSTANDING BUYING PROCESSES IS CRUCIAL • Months of marketing planning can be dismissed in the few moments that a buyer makes a purchase decision 3 -4 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

You are what you consume! • Write down three items you have purchased over the past two weeks. • Could be a cup of coffee, some text books, a few pints, laptop, shoes, hair cut, dentist, accommodation………. . 3 -5 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Understanding consumers: the key questions Who is important? What are their choice criteria? How do they buy? Customers Where do they buy? 3 -6 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 When do they buy?

Model of Buyer Behaviour Product Price Marketing and Other Stimuli Economic Technological Place Political Promotion Cultural Buying Decision Process Buyer’s Black Box Product Choice Brand Choice Buyer’s Response Dealer Choice 3 -7 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Buyer Characteristics Purchase Timing Purchase Amount

Figure 3. 1 Consumer Buying Decision-Making Process Individual influences Situational influences Decision-making process Group influences 3 -8 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Marketing mix

The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behaviour 3 -9 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Consumer market • Consumer market is defined as all the individuals and households who buy or acquire goods and services for personal consumption. • The world consumer market consists of approx 6. 3 billion people – the billion people in North America, Western Europe and Japan make up 70% of the world’s spending power. 3 -10 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Consumer buying roles • Initiator – Person who first suggests or thinks of the idea of buying a particular product. • Influencer – A person whose views or advice will influence the product • Decider – Buying decision maker of the product • Buyer – Ultimate purchaser • User – Ultimate user 3 -11 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Buying decision behaviour • Habitual buying behaviour – Characterised by low consumer involvement and few significant perceived brand differences • Variety seeking buying behaviour – Low consumer involvement but significant perceived brand differences 3 -12 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behaviour 3 -13 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Step 1. Need Recognition Buyer Recognizes a Problem or Need Internal Stimuli External Stimuli • Hunger • TV advertising • Thirst • Magazine advert • A person’s normal needs • Radio slogan • Stimuli in the environment 3 -14 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Need/Problem Recognition • Consumers can identify or recognise a problem independently from the marketer and look for a solution. • Marketers can use the marketing mix to bring a problem to consumers’ attention. • Problem recognition requires the willingness and the ability to fulfil the emerging need. 3 -15 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

You are what you consume! • What triggered your recent purchases? ? ? • Internal or External Stimuli? ? ? 3 -16 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Information Search Ongoing Search 3 -17 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Purposeful Search

The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post-purchase Behaviour 3 -18 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Step 2. Information Search Personal Sources Commercial Sources Public Sources Experiential Sources 3 -19 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 • Family, friends, neighbours • Most effective source of information • Advertising, salespeople • Receives most information from these sources • Mass Media • Consumer-rating groups • Handling the product • Examining the product • Using the product

You are what you consume! • What sources influenced you? ? ? 3 -20 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Information Evaluation Consumers construct a list of performance criteria, then assess each supplier or available brand against it. This reduces the potential options (wide list of potential products/services which might satisfy needs) to an evoked set (a shortlist for serious appraisal). Marketers influence this stage via communications campaigns which implant images of products/services or emphasise the importance of product/service attributes in consumers’ minds. 3 -21 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

3 -22 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Step 3. Evaluation of Alternatives Consumer May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own. Consumers May Make Buying Decisions Only After Consulting Others. 3 -23 Marketers Must Study Buyers to Find Out How They Evaluate Brand Alternatives Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Interactive Decision Aids 3 -24 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Step 4. Purchase Decision Purchase Intention Desire to buy the most preferred brand Unexpected Situational Factors Purchase Decision 3 -25 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

You are what you consume! • Any unexpected events change your decision? 3 -26 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Decision • Consumers may use rules of thumb to decide: – Choose the cheapest – Choose the most expensive – Select the brand used before – Others? 3 -27 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

The Buyer Decision Process Step 5. Postpurchase Behaviour Consumer’s Expectations of Product’s Performance Product’s Perceived Performance Satisfied Customer! 3 -28 Dissatisfied Customer Cognitive Dissonance Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Post-Purchase Evaluation • Affects likelihood of repeat purchase • May evoke cognitive dissonance 3 -29 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Post-purchase evaluation Has the purchase lived up to its expectations? Marketers can help reduce cognitive dissonance by: • Ensuring that customers’ needs and wants have been carefully researched. • Tailoring the marketing mix to suit the audience. • Painting a realistic picture of the product/service in all advertising literature. • Making sure consumers’ expectations are rooted in reality - for example letting the consumer test the product/service before purchase. • Good after sales care. 3 -30 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

POST-PURCHASE EVALUATION • Did our purchase live up to expectations? • If not, we could: – Return the product – Tell others – Rationalise our thoughts to overcome "cognitive dissonance" 3 -31 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Impact of Dissatisfied Customers “Dissatisfied customers can tell up to eleven other people about their bad experiences, which is two to three times more people than a satisfied customer will talk to. ” Smith, 1993 3 -32 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

WORD OF MOUTH RECOMMENDATION • How can you get customers to pass on favourable comments about your product? • A “hidden salesforce” 3 -33 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

You are what you consume! • Were you happy or unhappy? • Will you buy same product or service again? 3 -34 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Review of the Decision-Making Process I’m hungry Problem recognition What’s available? Information search Cakes or chocolate? Information evaluation Snickers! Decision I should’ve had cake. Post-purchase evaluation 3 -35 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Buying Situations Routine Limited 3 -36 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Extended

Routine Problem Solving Buying Situations These tend to be: • Routine day to day purchases/services. • Low risk purchases. • Low priced. • Frequently purchased goods/services. • Where loyalty to favourite brands is often shown (favourite breakfast cereal, etc. ). 3 -37 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Routine Problem-Solving Situation • Low risk, low price Purchase stages • Awareness • Trial • Repeat purchase 3 -38 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Limited Problem Solving Buying Situations These tend to be: • Buying situations that occur less frequently, e. g. a holiday, new TV, etc. • Situations that involve more deliberate decision making than routine buying problems. • Purchases that are moderately expensive. • Purchases that will be expected to last a long time. • Purchases that are perceived to have a greater risk. • Some form of information search and evaluation takes place. 3 -39 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Limited Problem Solving Situation • Moderate price, moderate risk • Relatively infrequent purchase 3 -40 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Extended Problem Solving Buying Situations • These represent a more serious investment of money, time and effort, e. g. new car or home. • These purchasing situations occur infrequently. • Involves gathering as much information and analysis as possible. 3 -41 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Extended Problem Solving Situation • High cost, high risk • Infrequent purchase 3 -42 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Determinants of the extent of problem solving Self-image Perceived risk High or Low Involvement Social factors Hedonism Differentiation and number of alternatives Time pressure 3 -43 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Extent of problem solving

Consumer Buying Decision-making Process 3 -44 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Situational (Environmental) Influences (NB. You should see Lesson 2 also!!!!) Sociocultural Regulatory Technological Political Economic Competitive 3 -45 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Factors Influencing Consumer Behaviour Cultural Social Culture Reference groups Subculture Family Social class Roles and status Personal Age and life-cycle Occupation Economic situation Lifestyle Personality and self-concept 3 -46 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Psychological Motivation Perception Learning Beliefs and attitudes Buyer

Figure 3. 3 Maslow’s Hierarchy of Needs Fulfilment Self-actualisation Esteem Success Membership Belongingness Safety Security Sex Physiological 3 -47 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Potential Status Affection Protection Hunger

Skoda Responded to Negative Attitudes 3 -48 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

PEER GROUP EFFECTS • How do you get young people to change their attitudes about Clarks shoes from “Shoes their parents would wear” to “Cool and modern”? 3 -49 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Personal factors – Age and life cycle phase – Psychological life cycles • Changing interests – Occupation – Economic circumstances • Savings and buying power – Lifestyle • Pattern of living expressed in activities • Psychographics is the technique of measuring lifestyles – Personality and self-concept 3 -50 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Personality can play a role in consumer behaviour, particularly with high involvement products (e. g. , choice of holiday) Source: © Hayes & Jarvis (Travel) Ltd http: //www. hayesandjarvis. co. uk 3 -51 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Group Influences Social class Culture and sub-culture Family Reference groups 3 -52 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Culture • Most basic cause of a person's wants and behaviour. • Values, Perceptions, Wants & Behaviour Subculture • Groups of people with shared value systems based on common life experiences. • Hispanic Consumers • African American Consumers • Asian American Consumers • Mature Consumers 3 -53 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Social Class • Society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviours. • Measured by: Occupation, Income, Education, Wealth and Other Variables.

Cultural factors • Culture – Basic cause of person’s wants and behaviour – Human behaviour is predominantly learned behaviour from family and other important institutions • Subculture – Group sharing similar value systems based upon life experiences and situations • Social class – Relatively permanent and ordered divisions in a society whose members share similar values interests and behaviours. 3 -54 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Influences on Culture 3 -55 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Factors Affecting Consumer Behaviour: Social Groups • Memb ership • Refere nce Family • Husba nd, wife, kids • Influen cer, buyer, user Roles and Status 3 -56 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Social Factors

Reference Groups • Membership eg Harley Davidson • Aspirant Source: © Harley-Davidson UK http: //www. harley-davidson. com 3 -57 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 • Dissociative

Figure 3. 4 Family Life Cycle 3 -58 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007

Figure 3. 5 Family as a Decision-Making Unit Initiator Influencer User Purchasing Decision Purchaser 3 -59 Brassington & Pettitt, Essentials of Marketing 2 e, © Pearson Education 2007 Decider