marketing ch-3. Best presentation for financial management ppt

Marketing

1. Chapter Three
CONSUMER BEHAVIOR

2. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 2
MEANING
•Consumerbuyingbehavior
–buyingbehavioroffinalconsumer
–Purchaseforpersonalconsumption.
•Consumermarket–individualandhouseholds
whobuyproductsforfinalconsumption.
•Consumerbehaviorstudieshowindividual,
groups,andorganizationselect,buy,use,
anddisposeofgoods,services,ideasof
experiencestosatisfytheirneeds&desires.
•Marketersmuststudytheirtargetcustomers’
wants,perception,preferences,andshopping
&buyingbehavior.

3. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 3
MEANING
•If customers are satisfied:
–They will buy more of a companies
products
–They advocate or talk favorably about the
companies and company's product
–They may advice the company for
improvement
–They give little attention to other
companies and their goods
–They may buy new products of the
company.
Unit 3 Consumer Behaviour

4. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 4
MEANING
•Consumers or buyers behavior involves the activities
of people engaged when selecting, purchasing and
using products, so as to satisfy the need and desire. It
also involves the study of:
–Who makes up the market?
–Possible reasons for purchasing?
–What kind of buying decisions are made?
–What are the key processes in purchasing?
–What influences the buying decision?
•But the central question in marketing is: how do
consumers respond to various marketing efforts the
company might use?
Unit 3 Consumer Behaviour

5. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 5
Model of buyer behavior
•The commonly used model to understand the buying behavior of consumers is the stimulus –
response model.
•Stimuli –there are quite a lot of factors, which stimulate customers to think of buying products
and to make ultimate decision of buying.
•These stimuli may strike a question in a consumer mind (black-box)
Marketing Other
Stimuli Stimuli
-Product -Economic
-Place -Technological
-Price -Political
-Promotion -Cultural
Buyer BuyerDecision
Characteristics Process
-Cultural -Problem recognition
-Social -Information Search
-Personal -Alternative evaluation
-Psychological -Purchase Decision
-Post-purchase behavior
Buyer's
responses
Product Choice
Brand Choice
Dealer Choice
Purchase
Timing
Purchase
Amount
Unit 3 Consumer Behaviour

6. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 6
The Buyer Decision Processes
Buying
Center
Information
Search
Post Purchase
Behavior
Purchase
Decision
Evaluation of
Alternatives
7-4
Need
Recognition
Unit 3 Consumer Behaviour

7. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 7
Consumer Problems and
Recognition
•Marketer should find out what kinds of needs or problems arise,
what brought them about, and how they led the consumer to this
particular product.
•Problems can be solved in several ways--e.g.,
stress reduction vacation, movie, hot bath, medication
Unit 3 Consumer Behaviour
•Consumer problem:Discrepancy
between idealand actual state.
•Triggered by internal stimuli(hunger, thirst,
sex) and external stimuli.

8. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 8
Information Search
•Theconsumercanobtaininformationfrom
anyofseveralsources:
-PersonalSource:themosteffective
-CommercialSources:providesthemost
information
-PublicSources:
-Experientialsources:handling,examining,
usingtheproduct
Unit 3 Consumer Behaviour

9. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 9
Evaluation of Alternatives
-Itinvolvesrankingproductsandformingpurchaseintentions
-Itisprocessinginformationtoarriveatbrand/productchoices
-Thequalityoftheproduct,itsprice,easeofuse,andotherattributes
willbeevaluated.
-Itismeasuringthebenefitsandcostsofeachbrand
Unit 3 Consumer Behaviour

10. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 10
Purchase Decisions
•Intheevaluationstage,theconsumer
ranksbrandsandformspurchase
intentions
•Theconsumer'spurchasedecisionwillbeto
buymostpreparedbrand.
•Twofactorscancomebetweenthepurchase
intentionandthepurchasedecision.
1.Theattitudeofothers.
2.Unexpectedsituationalfactors:eg.
Loosingyourjob
•Theconsumermayformapurchase
intentionbasedonfactorssuchas
expectedincome,expectedprice,and
expectedproductbenefits.
Unit 3 Consumer Behaviour

11. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 11
Post Purchase Behavior
•The marketer's job doesn't end when
the product is bought.
•Iftheproductfallshortofexpectations,
theconsumerisdisappointed,
•ifitmeetsexpectations,theconsumeris
satisfied,
•ifproduct'sperformanceexceeds
expectations,theconsumerisdelighted.
•Cognitivedissonance:Thenegative
feelingthatmayoccurafterapurchase.
Unit 3 Consumer Behaviour

12. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 12
Types of Buying Decision Behavior
Complex buying
behavior
eg. PC
Variety-seeking
buying behavior
Eg. cookies
Dissonance-
reducing buying
behavior eg. carpeting
Habitual buying
behavior
Egsalt
Significant
differences
betweenbrands
Few differences
between brands
High Involvement Low Involvement
Unit 3 Consumer Behaviour

13. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 13
•A) Complex Buying Behavior
Incomplex buyingbehavior
consumersarehighlyinvolvedina
purchase.
Consumers mayalsoperceive
significantdifferencesamongbrands
(products).
Consumersmaybehighlyinvolved
whentheproductisexpensive,risky,
purchasedinfrequently,andhighly
self-expressive.
Typically,theconsumerhasmuchto
learnabouttheproductcategory.
Ex:computerUnit 3 Consumer Behaviour

14. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 14
•B) Dissonance-Reducing Buying Behavior
•Dissonance-reducing buying behavior occurs
when consumers are highly involved with and
expensive, infrequent, or risky purchase but see
little difference among brands.
•Ex:carpeting
Unit 3 Consumer Behaviour

15. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 15
•C) Variety-seeking Buying
Behavior
Itoccursinsituationscharacterized
bylowconsumerinvolvement,but
significantperceived brand
differences
Insuchcases,consumersoftendo
alotofbrandswitching
Brandswitchingoccursforthesake
ofvarietyratherthanbecauseof
dissatisfaction.
Unit 3 Consumer Behaviour

16. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 16
•D) Habitual Buying Behavior
Habitual buying behavior occurs under conditions of
low consumer involvement and little significant brand
difference. Example, salt.
Consumers have little involvement in this product
category –they simply go to the store & reach for a
brand. If they keep reaching of the same brand, it is
out of habit rather than strong brand loyalty.
Consumer appears to have low involvement with most
low-cost, frequently purchased products
Unit 3 Consumer Behaviour

17. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 17
Organizational buying behavior
Organizational buying: refers to the buying behavior of the
organizations that buy goods and services for use in production
of other products and services that are sold, rented, or supplied
to others.
•Thebusinessmarketconsistsofallbusinessusers,organizationthat
buygoodsandservicesforoneofthefollowingpurposes.
1.Tomakeothergoodsandservices
2.Toreselltootherbusinessusersortoconsumersand
3.Toconducttheorganizationsoperations
•Themajorindustriesmakingupthebusinessmarketareagricultural,
forestryandfisheries,mining,manufacturing,construction,
transportation,communication,publicutilities,banking,financeand
insurancedistributionandservices.
Unit 3 Consumer Behaviour

18. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 18
The Business Market Versus the
Consumer Market
•Thebusinessmarketconsistsofallthe
organizationsthatacquiregoodsand
servicesusedintheproductionofother
productsorservicesthataresold,
rented,orsuppliedtoothers.
•Businessmarketshaveseveral
characteristicsthatcontrastsharplywith
thoseofconsumermarkets:
Unit 3 Consumer Behaviour

19. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 19
Characteristics of Business markets
•Fewer buyers:the business marketer normally deals with far fewer buyers than the consumer marketer does:
•Large buyers: a few large buyers do most of the purchasing in such industries as aircraft engines and
defense weapons.
•Class supplier -Customer relationship:because of the smaller customer base and the importance and
power of the larger customers, suppliers are frequently expected
•Geographically concentrated buyers: a very large group of business buyers in Ethiopia are concentrated in
major cities
•Derived demand:the demand for business goods is ultimately derived from the demand for consumer goods.
•Inelastic demand:the total demand for many business goods and services is inelastic that is, not much
affected by price changes.
•Fluctuating demand: the demand for business goods and services tends to be more volatile than the
demand for consumer goods and services
•Professional Purchasing: business goods are purchased by trained purchasing agents, who must follow the
organization's purchasing policies,
•Several buying influence: more people typically influence business-buying decisions.
•Direct purchasing: business buyers often buy directly from manufacturers rather than through
intermediaries,
•Reciprocity: business buyers often select suppliers who also buy from them
•Leasing: many industrial buyers lease instead of buy heavy equipment like machinery and trucks.
Unit 3 Consumer Behaviour

20. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 20
BUYING SITUATIONS IN
ORGANIZATIONAL BUYING
Unit 3 Consumer Behaviour
•Straight rebuy is a buying situation in which the purchasing
department re-orders on a routing basis (e.g. office supplies, bulk
chemicals). The buyer chooses from suppliers on an "approved
list".
•Modified rebuy is a purchase decision that requires some
research where the buyer wants to modify the product
specification, price, terms, or suppliers
•New task It is a buying situation in which a purchaser buys a
product or service for the first time (example could be office
building, new security system).
•The greater the risk or the cost, the larger the number of decision
participants and the greater their information gathering and
therefore the longer the time to decision completion.

21. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 21
Buying center is all of the individuals and units that participate in the
business decision-making process
Initiators: those who request that something be purchased the may be users
or others in the organization.
Users: those who will use the product or service. In many cases the users
initiate the buying proposal and help define the product requirements.
Deciders: people who decide on product requirements or on suppliers.
Approvers: people who authorize the proposed actions of deciders or
buyers.
Buyers: people who have formal authority to select the supplier and arrange
the purchase terms.
Gate keepers: people who have the power to prevent sellers or information
from reaching members of the buying center.
Participants in the Business Buying Process
Unit 3 Consumer Behaviour

22. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 22
Stages in the BusinessBuying
Process
1. Problem Recognition
•Problem recognition occurs when someone in the
company recognizes a problem or need
•Internal stimuli
–Need for new product or production equipment
•External stimuli
–Idea from a trade show or advertising
Unit 3 Consumer Behaviour

23. BUAD 307 CONSUMER BEHAVIOR Lars Perner, Instructor 23
2. General need description describes the characteristics and
quantity of the needed item
3. Product specification describes the technical criteria
4.Supplier search involves compiling a list of qualified suppliers
5. Proposal solicitation is the process of requesting proposals from qualified
suppliers
6. Supplier selection is the process when the buying center
creates a list of desired supplier attributes and negotiates with
preferred suppliers for favorable terms and conditions
7. Order-routine specifications is the final order with the chosen
supplier and lists all of the specifications and terms of the
purchase
8. Performance review involves a critique of supplier
performance to the purchase terms
Unit 3 Consumer Behaviour