What is Consumer Buying Behavior?

Definition of Buying Behavior:

Buying Behavior is the decision processes and acts of people involved in buying
and using products.
Need to understand:
• why consumers make the purchases that they make?
• what factors influence consumer purchases?
• the changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate consumer.
A firm needs to analyze buying behavior for:
• Buyers reactions to a firms marketing strategy has a great impact on the
firms success.
• The marketing concept stresses that a firm should create a Marketing mix
(MM) that satisfies (gives utility to) customers, therefore need to analyze the
what, where, when and how consumers buy.
• Marketers can better predict how consumers will respond to marketing str
ategies.
Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actu
al purchasing is only one stage of the process. Not all decision processes lead
to a purchase. All consumer decisions do not always include all 6 stages, determ
ined by the degree of complexity...discussed next.
The 6 stages are:
1. Problem Recognition(awareness of need)--difference between the desired s
tate and the actual condition. Deficit in assortment of products. Hunger--Food.
Hunger stimulates your need to eat.
Can be stimulated by the marketer through product information--did not know you
were deficient? I.E., see a commercial for a new pair of shoes, stimulates your
recognition that you need a new pair of shoes.
2. Information search--
o Internal search, memory.
o External search if you need more information. Friends and relatives (wor
d of mouth). Marketer dominated sources; comparison shopping; public sources etc
.
A successful information search leaves a buyer with possible alternatives, the e
voked set.
Hungry, want to go out and eat, evoked set is
o chinese food
o indian food
o burger king
o klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation, f
eatures the buyer wants or does not want. Rank/weight alternatives or resume sea
rch. May decide that you want to eat something spicy, indian gets highest rank e
tc.
If not satisfied with your choice then return to the search phase. Can you think
of another restaurant? Look in the yellow pages etc. Information from different
sources may be treated differently. Marketers try to influence by "framing" alt
ernatives.
4. Purchase decision--Choose buying alternative, includes product, package,
store, method of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product av
ailability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cogn
itive Dissonance, have you made the right decision. This can be reduced by warra
nties, after sales communication etc.
After eating an indian meal, may think that really you wanted a chinese meal ins
tead.
Handout...Pillsbury 1-800#s
1-800 #s gives the consumer a way of communicating with the marketer after purch
ase. This helps reduce cognitive dissonance when a marketer can answer any conce
rns of a new consumer.
Types of Consumer Buying Behavior
Types of consumer buying behavior are determined by:
• Level of Involvement in purchase decision. Importance and intensity of i
nterest in a product in a particular situation.
• Buyers level of involvement determines why he/she is motivated to seek i
nformation about a certain products and brands but virtually ignores others.
High involvement purchases--Honda Motorbike, high priced goods, products visible
to others, and the higher the risk the higher the involvement. Types of risk:
• Personal risk
• Social risk
• Economic risk
The four type of consumer buying behavior are:
• Routine Response/Programmed Behavior--buying low involvement frequently
purchased low cost items; need very little search and decision effort; purchased
almost automatically. Examples include soft drinks, snack foods, milk etc.
• Limited Decision Making--buying product occasionally. When you need to o
btain information about unfamiliar brand in a familiar product category, perhaps
. Requires a moderate amount of time for information gathering. Examples include
Clothes--know product class but not the brand.
• Extensive Decision Making/Complex high involvement, unfamiliar, expensiv
e and/or infrequently bought products. High degree of economic/performance/psych
ological risk. Examples include cars, homes, computers, education. Spend alot of
time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel etc. G
o through all six stages of the buying process.
• Impulse buying, no conscious planning.
The purchase of the same product does not always elicit the same Buying Behavior
. Product can shift from one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someon
e that does not go out often at all), but limited decision making for someone el
se. The reason for the dinner, whether it is an anniversary celebration, or a me
al with a couple of friends will also determine the extent of the decision makin
g.
Categories that Effect the Consumer Buying Decision Process
A consumer, making a purchase decision will be affected by the following three f
actors:
1. Personal
2. Psychological
3. Social
The marketer must be aware of these factors in order to develop an appropriate M
M for its target market.
Personal
Unique to a particular person. Demographic Factors. Sex, Race, Age etc.
Who in the family is responsible for the decision making.
Young people purchase things for different reasons than older people.
Handout...From choices to checkout...
Highlights the differences between male and female shoppers in the supermarket.
Psychological factors
Psychological factors include:
• Motives--
A motive is an internal energizing force that orients a person's activities towa
rd satisfying a need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identif
y motives then they can better develop a marketing mix.
MASLOW hierarchy of needs!!
o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization
Need to determine what level of the hierarchy the consumers are at to determine
what motivates their purchases.
Handout...Nutrament Debunked...
Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at
consumers that needed to receive additional energy from their drinks after exer
cise etc., a fitness drink. It was therefore targeted at consumers whose needs w
ere for either love and Belonging or esteem. The product was not selling well, a
nd was almost terminated. Upon extensive research it was determined that the pro
duct did sell well in inner-city convenience stores. It was determined that the
consumers for the product were actually drug addicts who couldn't not digest a r
egular meal. They would purchase Nutrament as a substitute for a meal. Their mot
ivation to purchase was completely different to the motivation that B-MS had ori
ginally thought. These consumers were at the Physiological level of the hierarch
y. BM-S therefore had to redesign its MM to better meet the needs of this target
market.
Motives often operate at a subconscious level therefore are difficult to measure
.
• Perception--
What do you see?? Perception is the process of selecting, organizing and interpr
eting information inputs to produce meaning. IE we chose what info we pay attent
ion to, organize it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, sm
ell and touch.
Selective Exposure-select inputs to be exposed to our awareness. More likely if
it is linked to an event, satisfies current needs, intensity of input changes (s
harp price drop).
Selective Distortion-Changing/twisting current received information, inconsisten
t with beliefs.
Advertisers that use comparative advertisements (pitching one product against an
other), have to be very careful that consumers do not distort the facts and perc
eive that the advertisement was for the competitor. A current example...MCI and
AT&T...do you ever get confused?
Selective Retention-Remember inputs that support beliefs, forgets those that don
't.
Average supermarket shopper is exposed to 17,000 products in a shopping visit la
sting 30 minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement
per day. Can't be expected to be aware of all these inputs, and certainly will n
ot retain many.
Interpreting information is based on what is already familiar, on knowledge that
is stored in the memory.
Handout...South Africa wine....
Problems marketing wine from South Africa. Consumers have strong perceptions of
the country, and hence its products.
• Ability and Knowledge--
Need to understand individuals capacity to learn. Learning, changes in a person'
s behavior caused by information and experience. Therefore to change consumers'
behavior about your product, need to give them new information re: product...fre
e sample etc.
South Africa...open bottle of wine and pour it!! Also educate american consumers
about changes in SA. Need to sell a whole new country.
When making buying decisions, buyers must process information.
Knowledge is the familiarity with the product and expertise.
Inexperience buyers often use prices as an indicator of quality more than those
who have knowledge of a product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack, because
 they assume that the greater price indicates greater quality.
Learning is the process through which a relatively permanent change in behavior
results from the consequences of past behavior.
• Attitudes--
Knowledge and positive and negative feelings about an object or activity-maybe t
angible or intangible, living or non- living.....Drive perceptions
Individual learns attitudes through experience and interaction with other people
.
Consumer attitudes toward a firm and its products greatly influence the success
or failure of the firm's marketing strategy.
Handout...Oldsmobile.....
Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovere
d by class exercise) need to disassociate Aurora from the Oldsmobile name.
Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic
oil spill.
Honda "You meet the nicest people on a Honda", dispel the unsavory image of a mo
torbike rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hon
das market returning to hard core. To change this they have a new slogan "Come r
ide with us".
Attitudes and attitude change are influenced by consumers personality and lifest
yle.
Consumers screen information that conflicts with their attitudes. Distort inform
ation to make it consistent and selectively retain information that reinforces o
ur attitudes. IE brand loyalty.
There is a difference between attitude and intention to buy (ability to buy).
• Personality--
all the internal traits and behaviors that make a person unique, uniqueness arri
ves from a person's heredity and personal experience. Examples include:
o Workaholism
o Compulsiveness
o Self confidence
o Friendliness
o Adaptability
o Ambitiousness
o Dogmatism
o Authoritarianism
o Introversion
o Extroversion
o Aggressiveness
o Competitiveness.
Traits effect the way people behave. Marketers try to match the store image to t
he perceived image of their customers.
There is a weak association between personality and Buying Behavior, this may be
due to unreliable measures. Nike ads. Consumers buy products that are consisten
t with their self concept.
• Lifestyles--
Recent US trends in lifestyles are a shift towards personal independence and ind
ividualism and a preference for a healthy, natural lifestyle.
Lifestyles are the consistent patterns people follow in their lives.
EXAMPLE healthy foods for a healthy lifestyle. Sun tan not considered fashionabl
e in US until 1920's. Now an assault by the American Academy of Dermatology.
Can be risky...Michael Jackson...OJ Simpson...Chevy Chase
• Roles and Family Influences--
Role...things you should do based on the expectations of you from your position
within a group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing to change therefor
e marketers must continue to update information.
Family is the most basic group a person belongs to. Marketers must understand:
o that many family decisions are made by the family unit
o consumer behavior starts in the family unit
o family roles and preferences are the model for children's future family
(can reject/alter/etc)
o family buying decisions are a mixture of family interactions and individ
ual decision making
o family acts an interpreter of social and cultural values for the individ
ual.
The Family life cycle: families go through stages, each stage creates different
consumer demands:
o bachelor stage...most of BUAD301
o newly married, young, no children...me
o full nest I, youngest child under 6
o full nest II, youngest child 6 or over
o full nest III, older married couples with dependant children
o empty nest I, older married couples with no children living with them, h
ead in labor force
o empty nest II, older married couples, no children living at home, head r
etired
o solitary survivor, in labor force
o solitary survivor, retired
o Modernized life cycle includes divorced and no children.
Handout...Two Income Marriages Are Now the Norm
Because 2 income families are becoming more common, the decision maker within th
e family unit is changing...also, family has less time for children, and therefo
re tends to let them influence purchase decisions in order to alleviate some of
the guilt. (Children influence about $130 billion of goods in a year) Children a
lso have more money to spend themselves.
• Reference Groups--
Individual identifies with the group to the extent that he takes on many of the
values, attitudes or behaviors of the group members.
Families, friends, sororities, civic and professional organizations.
Any group that has a positive or negative influence on a persons attitude and be
havior.
Membership groups (belong to)
Affinity marketing is focused on the desires of consumers that belong to referen
ce groups. Marketers get the groups to approve the product and communicate that
approval to its members. Credit Cards etc.!!
Aspiration groups (want to belong to)
Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the "biker" group.
The degree to which a reference group will affect a purchase decision depends on
an individuals susceptibility to reference group influence and the strength of
his/her involvement with the group.
• Social Class--
an open group of individuals who have similar social rank. US is not a classless
society. US criteria; occupation, education, income, wealth, race, ethnic group
s and possessions.
Social class influences many aspects of our lives. IE upper middle class America
ns prefer luxury cars Mercedes.
o Upper Americans-upper-upper class, .3%, inherited wealth, aristocratic n
ames.
o Lower-upper class, 1.2%, newer social elite, from current professionals
and corporate elite
o Upper-middle class, 12.5%, college graduates, managers and professionals
o Middle Americans-middle class, 32%, average pay white collar workers and
blue collar friends
o Working class, 38%, average pay blue collar workers
o Lower Americans-lower class, 9%, working, not on welfare
o Lower-lower class, 7%, on welfare
Social class determines to some extent, the types, quality, quantity of products
that a person buys or uses.
Lower class people tend to stay close to home when shopping, do not engage in mu
ch prepurchase information gathering.
Stores project definite class images.
Family, reference groups and social classes are all social influences on consume
r behavior. All operate within a larger culture.
• Culture and Sub-culture--
Culture refers to the set of values, ideas, and attitudes that are accepted by a
homogenous group of people and transmitted to the next generation.
Culture also determines what is acceptable with product advertising. Culture det
ermines what people wear, eat, reside and travel. Cultural values in the US are
good health, education, individualism and freedom. In american culture time scar
city is a growing problem. IE change in meals. Big impact on international marke
ting.
Handout...Will British warm up to iced tea?
No...but that is my opinion!!...Tea is a part of the British culture, hot with m
ilk.
Different society, different levels of needs, different cultural values.
Culture can be divided into subcultures:
o geographic regions
o human characteristics such as age and ethnic background.
IE West Coast, teenage and Asian American.
Culture effects what people buy, how they buy and when they buy.
1. Market demands or demand curves are explained as stemming from the process of
individuals' choosing their most preferred bundle of consumption goods and serv
ices.
2. Economists explain consumer demand by the concept of utility, which denotes t
he relative satisfaction that a consumer obtains from using different commoditie
s. The additional satisfaction obtained from consuming an additional unit of a g
ood is given the name marginal utility, where Òmarginal" means the extra or incr
emental utility. The law of diminishing marginal utility states that as the amou
nt of a commodity consumed increases, the marginal utility of the last unit cons
umed tends to decrease.
3. Economists assume that consumers allocate their limited incomes so as to obta
in the greatest satisfaction or utility. To maximize utility, a consumer must sa
tisfy the equimarginal principle that the marginal utilities of the last dollar
spent on each and every good must be equal.
Only when the marginal utility per dollar is equal for apples, bacon, coffee, an
d everything else will the consumer attain the greatest satisfaction from a limi
ted dollar income. But be careful to note that the marginal utility of a $50-per
-ounce bottle of perfume is not equal to the marginal utility of a 50-cent glass
of cola. Rather,
their marginal utilities divided by price per unit are all equal in the consumer
's optimal allocation. That is, their marginal utilities per last dollar, MU/P,
are equalized.
4. Equal marginal utility or benefit per unit of resource is a fundamental rule
of choice. Take any scarce resource, such as time. If you want to maximize the v
alue or utility of that resource, make sure that the marginal benefit per unit o
f the resource is equalized in all uses.
5. The market demand curve for all consumers is derived by adding horizontally t
he separate demand curves of each consumer. A demand curve can shift for many re
asons. For example, a rise in income will normally shift DD rightward, thus incr
easing demand; a rise in the price of a substitute good (e.g., chicken for beef)
will also create a similar upward shift in demand; a rise in the price of a com
plementary good (e.g., hamburger buns for beef) will in turn cause the DD curve
to shift downward and leftward. Still other factorsÑchanging tastes, population,
or expectationsÑcan affect demand.
6. We can gain added insight into the factors that cause downward-sloping demand
by separating the effect of a price rise into substitution and income effects.
(a) The substitution effect occurs when a higher price leads to substitution of
other goods to meet satisfactions; (b) the income effect means that a price incr
ease lowers real income and thereby reduces the desired consumption of most comm
odities. For most goods, substitution and income effects of a price increase rei
nforce one another and lead to the law of downward-sloping demand. We measure th
e quantitative responsiveness of demand to income by the income elasticity, whic
h is the percentage change in quantity demanded divided by the percentage change
in income.
7. Remember that it is the tail of marginal utility that wags the market dog of
prices and quantities. This point is emphasized by the concept of consumer surpl
us. We pay the same price for the last quart of milk as for the first. But, beca
use of the law of diminishing marginal utility, marginal utilities of earlier un
its are greater than that of the last unit. This means that we would have been w
illing to pay more than the market price for each of the earlier units. The exce
ss of total value over market value is called consumer surplus. Consumer surplus
reflects the benefit we gain from being able to buy all units at the same low p
rice. In simplified cases, we can measure consumer surplus as the area between t
he demand curve and the price line. It is a concept relevant for many public dec
isionsÑsuch as deciding when the community should incur the heavy expenses of a
road or bridge or set aside land for a wilderness area.
Summary
1. An indifference curve depicts the points of equally desirable consumption bun
dles. The indifference contour is usually drawn convex (or bowl-shaped) in accor
dance with the law of diminishing relative marginal utilities.
2. When a consumer has a fixed money income, all of which she spends, and is con
fronted with market prices of two goods, she is constrained to move along a stra
ight line called the budget line or budget constraint. The line's slope will dep
end on the ratio of the two market prices; how far out it lies will depend on th
e size of her income.
3. The consumer will move along this budget line until reaching the highest atta
inable indifference curve. At this point, the budget line will touch, but not cr
oss, an indifference curve. Hence, equilibrium is at the point of tangency, wher
e the slope of the budget line (the ratio of the prices) exactly equals the slop
e of the indifference curve (the substitution ratio or the ratio of the marginal
utilities of the two goods). This gives additional proof that, in equilibrium,
marginal utilities are proportional to prices.
4. A fall in income will move the budget line inward in a parallel fashion, usua
lly causing less of both goods to be bought. A change in the price of one good a
lone will, other things being constant, cause the budget line to pivot so as to
change its slope. After a price or income change, the consumer will again attain
a new tangency point of highest satisfaction. At every point of tangency, the m
arginal utility per dollar is equal for every good. By comparing the new and old
equilibrium points, we trace the usual downward-sloping demand curve.
.