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York University
Administrative Studies
ADMS 2200
Li Lee

Chapter 6 Understanding Consumer and Business Buyer Behaviour CHAPTER 6 UNDERSTANDING CONSUMER AND BUSINESS BUYER BEHAVIOUR PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES 1. understand the consumer market and the major factors that influence consumer buyer behaviour 2. identify and discuss the stages in the buyer decision process 3. describe the adoption and diffusion process for new products 4. define the business market and identify the major factors that influence business buyer behaviour 5. list and define the steps in the business buying decision process JUST THE BASICS CHAPTER OVERVIEW In this chapter, we continue our marketing journey with a closer look at the most important element of the marketplace—customers. The aim of marketing is to affect how customers think about and behave toward the organization and its market offerings. But to affect the whats, whens, and hows of buying behaviour, marketers must first understand the whys. We look first at final consumer buying influences and processes and then at the buying behaviour of business customers. ANNOTATED CHAPTER NOTES/OUTLINE INTRODUCTION Apple: The keeper of all things cool. Few brands engender such intense loyalty as that found in the hearts of core Apple buyers. Apple’s obsession with understanding customers and deepening their Apple experience shows in everything the company does. Apple’s keen understanding of customers and their needs helped the brand to build a core segment of enthusiastic disciples. “To say Apple is hot just doesn’t do the company justice.” Apple is smoking. CONSUMER MARKETS AND CONSUMER BUYER BEHAVIOUR Part 2 Understanding the Marketplace and Consumers Consumer buyer behaviour refers to the buying behaviour of final consumers—individuals and households who buy goods and services for personal consumption. Allof these consumers combine to make up the consumer market. The North American consumer market consists of more than 333 million people who consume more than $14 trillion worth of goods and services each year. The world consumer market consists of more than 6.8 billion people. What is Consumer Behaviour? Consumers make many purchase decisions and some are more complex than others. Most large companies research consumer buying decisions in great detail to answer questions about: • what consumers buy • where they buy • how and how much they buy • when they buy • why they buy Often, consumers themselves don’t know exactly what influences their purchases. The central question for marketers is: Given all the characteristics (cultural, social, personal, and psychological) affecting consumer behaviour, how do we best design our marketing efforts to reach our consumers most effectively? The study of consumer behaviour begins and ends with the individual. Characteristics Affecting Consumer Behaviour Consumer purchases are influenced strongly by cultural, social, personal, and psychological characteristics, shown in Figure 6.2. Cultural Factors Culture is the most basic cause of a person’s wants and behaviour. Marketers are always trying to spot cultural shifts. Subcultures are groups of people with shared value systems based on common life experiences and situations. Canada is a regional country, so marketers may develop distinctive programs for the Atlantic provinces, Quebec, Central Canada, the Prairies, and BC. Canada had three founding nations: the English, French, and Aboriginal peoples. The unique Chapter 6 Understanding Consumer and Business Buyer Behaviour history and language of each of these nations has driven many of the cultural differences that result in different buying behaviours across Canada. The most recent census results (2006) reported the following: • English (anglophones) accounted for approximately57 percent of the population, • French (francophones) made up approximately 22 percent of the population, • Aboriginals represented 3.7 percent of the total population. According to Statistics Canada, roughly one out of every five people in Canada could be a member of a visible minority by 2017. • People with a Chinese background are the largest group among visible minorities in Canada at 3.74 percent of Canada’s population (40 percent of this group residing in Toronto and 31 percent are in Vancouver). • People of South Asian origin (currently 23 percent of visible minorities) may represent as large a marketplace by 2017. • People who identified themselves as “black” in the 2006 census are Canada’s third largest visible minority. While some members of this group trace their ancestry back to Africa, many others have more recently emigrated from the Caribbean. Though age is a demographic variable, some researchers also contend that different age cohorts have distinct cultures. • As of July 2008, the median age in Canada was 39.4 years and higher than ever before • As the Canadian population ages, mature consumers are becoming a very attractive market. By 2015, the entire baby boom generation, the largest and wealthiest demographic cohort in the country for more than half a century, will have moved into the 50-plus age bracket. Social Classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviours. Social class is not determined by a single factor, but is measured as a combination of occupation, income, education, wealth, and other variables. Social Factors Groups and Social Networks. A person’s behaviour is influenced by manysmall groups. Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. These 10 percent of consumers are called the influentials or leading adopters. Marketers use buzz marketing to spread the word about their brands. Online social networks are online spaces where people socialize or exchange information and Part 2 Understanding the Marketplace and Consumers opinions. Family is the most important consumer buying organization in society. 70 percent of women hold jobs outside the home. Approximately 65 percent of men grocery shop regularly. Canadian kids influence some $20 million in household spending each year and have memorized between 300 and 400 brand names by the age of 10. Roles and Status. A role consists of the activities people are expected to perform. Each role carries a status reflecting the general esteem given to it by society. Personal Factors Age and Life-Cycle Stage. People change the goods and services they buy over their lifetimes. Marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage. Occupation. A person’s occupation affects the goods and services bought. Economic Situation. A person’s economic situation willaffect product choice. Lifestyle is a person’s pattern of living as expressed in his or her psychographics. AIO dimensions are activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products). Personality and Self-Concept. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. A brand personality is the specific mix of human traits that may be attributed to a particular brand. One researcher identified five brand personality traits: 1. Sincerity (down-to-earth, honest, wholesome, and cheerful) 2. Excitement (daring, spirited, imaginative, and up-to-date) 3. Competence (reliable, intelligent, and successful) 4. Sophistication (upper class and charming) 5. Ruggedness (outdoorsy and tough) The basic self-concept (self-image) premise is that people’s possessions contribute to and reflect their identities; that is, “we are what we have.” Psychological Factors Chapter 6 Understanding Consumer and Business Buyer Behaviour Motivation. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Freud suggests that a person’s buying decisions are affected by subconscious motives that even the buyer may not fullyunderstand. Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Maslow sought to explain why people are driven by particular needs at particular times. (Figure 6.3) Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Selective attention is the tendency for people to screen out most of the information to which they are exposed. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective retention is the retaining of information that supports their attitudes and beliefs. Subliminal advertising refers to marketing messages received without consumers knowing it. Studies find no link between subliminalmessages and consumer behaviour. Learning describes changes in an individual’s behaviour arising from experience. A drive is a strong internal stimulus that calls for action. A drive becomes a motive when it is directed toward a particular stimulus object. Cues are minor stimuli that determine when, where, and how the person responds. Beliefs and Attitudes. A belief is a descriptive thought that a person has about something. Attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. The Buyer Decision Process (Figure 6.4) The buyer decision process consists of five stages: 1. need recognition, 2. information search, Part 2 Understanding the Marketplace and Consumers 3. evaluation of alternatives, 4. purchase decision, and 5. post-purchase behaviour. Need Recognition The buyer recognizes a problem or need. The need can be triggered by either an: • internal stimuli or • external stimuli. Information Search Information search may or may not occur. Consumers can obtain information from any of several sources. • Personal sources (family, friends, neighbours, acquaintances), • Commercial sources (advertising, salespeople, Web sites dealers, packaging, displays), • Public sources (mass media, consumer rating organizations, Internet searches), and • Experiential sources (handling, examining, using the product). Commercial sources inform the buyer. Personal sources legitimize or evaluate products for the buyer. Evaluation of Alternatives Alternative evaluation: how the consumer processes information to arrive at brand choices. How consumers go about
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