Intro to Marketing section 2 (Consumer Behaviour & Business-to-Business Marketing)

The consumer decision process steps

1. Need recognition

2. Information search

3. Alternative evaluation

4. Purchase decision

5. Post-purchase

Need recognition

When consumers realize they have a need and want to fulfill it

Information search

The search for information about options that are available to fill a need

Internal search for information

Buyers look into their own memory/knowledge about the offering via past experience

External search for information

Consumers find info based on their personal knowledge when making decisions

Locus of control

How much control people believe they have as well as who has control over outcomes of given actions

Performance risk

The potential danger of a poorly performing offering

e.g. cellphone batteries that may explode

Financial risk

The momentary outlay and costs of buying/using an offering

(warranties are offered to mitigate this risk)

Social risk

Fears that purchases won’t be received well by others

Safety risk

The threat to safety when an offering doesn’t perform as expected

Psychological risk

How people will feel if a product doesn’t convey the right image

Alternative evaluation

When a consumer’s mind organizes & categories alternatives to help in their decision-making

Evoked set

Brands consumers say they’ll only pick when making a purchase decision

Retrieval set

Brands/stores that can be easily remembered

Evaluative criteria

A set of attributes about specific traits used to compare other products

e.g. The cost, quality, and materials when buying an outfit

Determinant attributes

Service features which are important to the buyer and what competitors perceive to differ

e.g. Health and nutrition claims

Consumer decision rules

A set of criteria that are used by consumers to consciously or subconsciously pick from multiple offerings quickly and efficiently

Compensatory decision

Presuming the customer trades off characteristics when picking alternatives

e.g. The mileage, price, style, and features when buying a car

Non-compensatory decision

When consumers choose an offering based on a subset of traits with no regard to other traits

e.g. A customer might reject a car for its style despite it having great mileage

Decision heuristics

Mental shortcuts that narrow down choices

e.g. Brand(s), price(s), product(s)

Purchase decision

The consumer’s ready to buy after evaluating the alternatives

Post-purchase

How customers feel after making a purchase decision

Customer satisfaction

The customers pleased with the results of the purchase

Post-purchase dissonance

A feeling of regret or remorse after making a purchase decision where the buyer questions the appropriateness of the purchase

High-involvement decision-making/ Extended problem-solving

Consumers give lots of thought and do plenty of research into the available info before making a purchase decision; this is done for high-risk and high-cost purchases

Low-involvement decision making/problem solving

Consumers give little thought and do little research before making a purchase decision; this is usually done for low-cost, low-risk and repeated purchases

Impulse buying

Purchase decisions made on the spot

Habitual decision making

Purchases made with little conscious effort.

e.g. someone always buying an Ice Capp at Tim Hortons

Psychological factors

Internal influences to the customers

e.g. motives, perspectives, lifestyles

Maslow’s hierarchy of needs

1. Self-actualization

2. Esteem needs

3. Love/ Social needs

4. Saftey needs

5. Phsiolyogical needs

Self-actualization

When one feels completely satisfied with their life

Esteem needs

The fulfillment of inner desires (e.g yoga, health clubs); is also related to respect; they arise due to people’s need to feel important

Love/social needs

Related to interactions with others (e.g. haircuts, makeup)

Physiological needs

The biological necessities of life (e.g. food, shelter)

Safety needs

Physical wellbeing (e.g. airbags, alarms)

Attitude

One’s constant evaluation of feelings about an object/idea

Cognitive attitude

What’s believed to be true

Affective attitude

The feelings about an issue at hand

Behavioural attitude

The actions taken on one’s feelings

Perception

How info’s organized, interpreted, and selected to create a meaningful image of the world; is shaped by the 5 senses

Selective exposure

People who only look at one aspect of information but not another.

e.g. Someone may only look at sports, but not comedy

Selective attention

Listening only to messages that align with possessed beliefs

e.g. someone may watch sports, but not boxing ,as it may be too violent

Selective comprehension

When a message’s interpreted in way that’s different than expected.

Selective retention

When consumers don’t remember all the info given

Learning

A change in one’s thoughts or beliefs that arise from experience and take place for the entire consumer decision process

Lifestyle

How people spend their time and money to live

Social factors

The external social environments that influence the consumer decision

Family

The needs of all family members are considered

Reference groups

One or more persons one uses as a base for comparison regarding behaviours, feelings, and beliefs

Directly provides info to consumers via conversation or observation

Culture

Shared meanings, morals, beliefs, or values

Situational factors

Specific situational factors that override or influence psychological and social issues

Purchase situation

Consumers may be predisposed to buy offerings from certain products for certain reasons but can change in specific situations

Temporal state

Preconceived notions of what people will buy that can be changed by the mind

Business to business marketing (B2B)

Focused efforts on serving specific types of customer markets to make value for consumers

Manufacturers

Those who buy raw materials and parts that allow them to buy products

Resellers

Intermediaries of marketing that resell built goods without any changes

e.g. wholesalers, distributors, and retailers are resellers

The buying centre

The involved individuals who are highly trained and qualified and represent the interests of organization.

Market traits

Demand for offerings are mostly derived from B2C sales

e.g. If people want more staplers (B2C), then companies will have to obtain more materials to produce them

Derived demand

The linkage between consumer’s demand for a firm’s output & buying of needed components to produce said output

The B2B buying process

1. Need recognition

2. Product specification

3. Request for proposals

4. Proposal analysis

5. Order specification (purchase)

6. Vendor performance analysis using metrics

Need recognition

The buying organization recognizes a need that’s unfulfilled

Product Specification

A list of specs, are written

e.g. size, battery life, speed, and delivery for laptops

Request for proposals (RFP)

When buying organizations invite buyers to bid on supplying their needs

Proposal analysis

Firms narrow the process to a few suppliers and discuss major points of the sale

Order specification (purchase)

An order is placed with a detailed description of the price, goods included, delivery date, etc.

Vendor performance analysis using metrics

The firm analyzes the vendor’s performance so decisions can be made about the future

Buying Centre Members

1. Initiator

2. Influencer

3. Decider

4. Buyer

5. User'

6. Gatekeeper

Initiator

The individual that first suggests buying an offering

e.g. a doctor prescribing the best products to treat a condition

Influencer

The one whose views shape others in the buying centre when making the final decision

e.g. A base screw company recommending and demonstrating the product, which a doctor sees as a good value

Decider

The person who, in the end, determines any part of the whole buying section

e.g. whether or not to buy, what to buy, how to buy, etc

Buyer

The person who handles the paperwork for the actual purchase

Must also identify the influencing factors for the buying process of clients

User

The parties who’ll use an offering

e.g. The patient who will use the bone screw and see how they’ll feel when doing so

Gatekeeper

The party(s) who control info/access to decision-makers and influencers

e.g. A hospital’s purchasing department may think mendell bone screws are too expensive, and may suggest an alternative.

Autocratic buying centres

Could have multiple participants, but only one person makes the decision

Democratic buying centre

Majority rules when it comes to the final decision

Consultive decision making

One person makes a decision but gathers input from everyone else

Consensus buying centre

All team members reach a unanimous agreement that can support a purchase

New buy situation

Consumer(s) buy an item for the 1st time and make the decision. The buying process is very involved as it’s the first time buying the product and thus there’s no prior experience. Is the most complex buying situation

Modified rebuy buying situation

When a buyer’s bought a similar product in the past and decides to make slight alterations

Straight rebuy

When a buyer purchases one or more units a product they’ve already bought

Inelastic demand

Demand that’s unaffected by price

Elastic demand

Demand that’s affected by price

Strategic business unit

A division of the company that’s managed somewhat independently from the other divisions; markets particular set(s) of products to a clearly defined group of customers

White papers

Used by majority of B2B Marketers for marketing efforts

Are read by B2B buyers before a purchase’s made

Conversion rate

How effectively a decision to purchase a particular product will result in an actual purchase

CDSTEP

Cultural, Demographic, Social, Technological, Environmental, Political forces and the changes within all them

Consumer decison process

The steps that consumers go through before, during, and after making purchases.