Consumer and Business Buyer Behavior Notes

Consumer Markets and Buyer Behavior

Learning Objective 5.1: Define the Consumer Market and Construct a Simple Model of Consumer Buyer Behavior

  • Consumer Buyer Behavior: The buying behavior of final consumers, including individuals and households, who purchase goods and services for personal consumption.

  • Consumer Markets: Composed of all individuals and households that buy or acquire goods and services for personal consumption.

Model of Consumer Behavior

  • Figure 5.1: The Model of Buyer Behavior

    • Environment:

      • Marketing stimuli: Product, Price, Place, Promotion

      • Other stimuli: Economic, Technological, Social, Cultural

      • Micro & Macro environment

    • Buyer's Black Box:

      • Buyer's characteristics

      • Buyer's decision process

    • Buyer Responses:

      • Buying attitudes and preferences

      • Purchase behavior: what the buyer buys, when, where, and how much

      • Brand engagements and relationships

  • Marketers aim to understand the 'whys' of consumer buying behavior, which is difficult to ascertain as it resides in the 'black box' of the consumer's mind.

Learning Objective 5.2: Name the Four Major Factors That Influence Consumer Buyer Behavior

  • Factors influencing consumer behavior:

Characteristics Affecting Consumer Behavior

  • Figure 5.2: Factors Influencing Consumer Behavior

  • Figure 5.3: Maslow's Hierarchy of Needs

    • Maslow's Hierarchy of Needs arranges human needs in a hierarchy:

      • Physiological needs: Hunger, thirst, food

      • Safety needs: Security, protection

      • Social needs: Sense of belonging, love, friendship

      • Esteem needs: Self-esteem, recognition, status

      • Self-actualization needs: Self-development and realization

    • Individuals prioritize needs based on this hierarchy; for instance, a starving person is unlikely to be interested in art.

Learning Objective 5.3: Define the Major Stages in the Buyer Decision Process

  1. A person’s culture, subculture, and social class influence their wants and behavior.

Example: In some cultures, buying luxury goods is a status symbol.

  1. social factors= groups and social networks, family, roles and status that shape the decisions

Example= you might buy a certain brand because your friend recommend

  1. personal= Includes age, occupation, income, lifestyle, and personality.

Example: A student may choose cheaper options, while a working adult might spend more on quality.

  1. psychological= Affects how a person thinks and feels about products

  • Motivation – Drives action.
    E.g.: Buying food when hungry.

  • Perception – How info is understood.
    E.g.: Seeing a sale as a good or bad deal.

  • Learning – Behavior changes from experience.
    E.g.: Avoiding cheap brands after a bad experience.

  • Beliefs & Attitudes – What we think and feel.
    E.g.: Preferring eco-friendly brands.


The Buyer Decision Process

  • Figure 5.5: The Buyer Decision Process

    • The buying process starts long before the actual purchase and continues long after.

    • It might also result in a decision not to buy; marketers must focus on the entire buying process, not just the purchase decision.

    • Stages:

      • Need recognition

      • Information search

      • Evaluation of alternatives

      • Purchase decision

      • Post-purchase behavior

Need Recognition

  • The first stage where the consumer recognizes a problem or need triggered by:

    • Internal stimuli

    • External stimuli

Information Search

  • The stage where the consumer is motivated to search for more information.

  • Sources of information:

    • Personal sources

    • Commercial sources

    • Public sources

    • Experiential sources

Evaluation of Alternatives

  • The stage where the consumer uses information to evaluate alternative brands in the choice set.

Purchase Decision

  • The buyer's decision about which brand to purchase.

  • The purchase intention may not be the purchase decision due to:

    • Attitudes of others

    • Unexpected situational factors

Postpurchase Behavior

  • The stage where consumers take further action after purchase, based on their satisfaction or dissatisfaction.

  • Cognitive dissonance: Buyer discomfort caused by postpurchase conflict.

  • Postpurchase customer satisfaction is key to building profitable customer relationships; most marketers aim to delight customers.

Learning Objective 5.4: Describe the Adoption and Diffusion Process for New Products

  • Adoption and diffusion process for new products.

The Buyer Decision Process for New Products

  • The adoption process is the mental process an individual goes through from first learning about an innovation to final regular use.

  • Stages in the adoption process include:

    • Awareness

    • Interest

    • Evaluation

    • Trial

    • Adoption

    • Example: Beyond Meat offering free samples to encourage consumers to try their product.

Individual Differences in Innovativeness

  • Categories of adopters:

    • Innovators

    • Early Adopters

    • Early Mainstream

    • Late Mainstream

    • Lagging Adopters

  • Figure 5.6: Adopter Categories Based on Relative Time of Adoption of Innovations

Business Markets and Business Buyer Behavior

Learning Objectives

  • 6. 1 Define the business market and explain how business markets differ from consumer markets.

  • 6. 2 Identify the major factors that influence business buyer behavior.

  • 6. 3 List and define the steps in the business buying decision process.

  • 6. 4 Compare the institutional and government markets and explain how institutional and government buyers make their buying decisions.

Business Markets and Business Buyer Behavior

  • Business buyer behavior: The buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

  • The business buying process: The process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brands.

Learning Objective 6.1: Define the Business Market and Explain How Business Markets Differ from Consumer Markets

Business Markets

  • Market Structure and Demand

    • Fewer but larger buyers

    • Derived demand

    • Inelastic demand

    • Fluctuating demand

  • Nature of the Buying Unit

    • More decision participants

    • More professional purchasing effort

    • More buyer and seller interaction

  • Types of Decisions and the Decision Process

    • Supplier development: Systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others.

Learning Objective 6.2: Identify the Major Factors That Influence Business Buyer Behavior

Business Buyer Behavior

  • Figure 6.1: A Model of Business Buyer Behavior

    • The model is similar to the consumer buyer behavior model but with major differences in the nature of the buying unit, the types of decisions made, and the decision process.

    • The environment

      • Marketing stimuli: Product, Price, Place, Promotion

      • Other stimuli: Economic, Technological, Political, Cultural, Competitive

    • The buying organization

      • The buying center

      • Buying decision process

    • Business buyer responses:

      • Product or service choice

      • Supplier choice

      • Supplier relationship

      • Order quantities

      • Service terms

      • Payment

  • Figure 6.2: Major Influences on Business Buyer Behavior

    • Environmental

      • The economy

      • Supply conditions

      • Technology

      • Politics/regulation

      • Competition

      • Culture and customs

    • Organizational

      • Objectives

      • Strategies

      • Structure

      • Systems

      • Procedures

    • Interpersonal

      • Influence

      • Expertise

      • Authority

      • Dynamics

    • Individual

      • Age/education

      • Job position

      • Motives

      • Personality

      • Preferences

      • Buying style

Learning Objective 6.3: List and Define the Steps in the Business Buying Decision Process

  • Steps in the business buying-decision process.

  • Problem Recognition The company realizes it has a need.
    Example: A factory notices its machines are slowing down and decides it's time for new equipment.(demand for new equipment)

  • General Need Description, They define what kind of product or service is required.
    Example: The company decides it needs energy-efficient machines that can produce 100 units per hour. also MOQ

  • Product SpecificatioN, The technical details and features of the needed product are outlined.
    Example: The machines must have specific voltage, speed, durability, and safety features.

  • Supplier Search, The company looks for potential suppliers.
    Example: They search online, go to trade shows, or check supplier reviews to find reliable vendors.

  • Proposal Solicitation, They invite suppliers to submit bids or proposals.
    Example: The company asks three machine suppliers to send detailed price and product offers or A restaurant owner asking a few local vendors for prices on coffee machines and discussing the best deal over lunch(negotiate informally) 

  • Supplier Selection, The business evaluates and chooses the best supplier.
    Example: After comparing proposals, they choose the one that offers the best quality and service at a fair price.

  • Order-Routine Specification, The company finalizes the purchase details. formally (deposit)
    Example: They confirm delivery date, warranty, payment terms, and installation process with the chosen supplier.

  • Performance Review, They review the supplier’s performance after the purchase.
    Example: If the machines work well and service is good, the supplier may be considered for future orders.

  • Figure 6.3: Stages of the Business Buyer Decision Process

Learning Objective 6.4: Compare the Institutional and Government Markets and Explain How Institutional and Government Buyers Make Their Buying Decisions

Institutional and Government Markets

  • Institutional markets consist of schools, hospitals, nursing homes, and prisons that provide goods and services to people in their care.

    • Characteristics :

      • Low budgets

      • Captive patrons

  • Government markets tend to favor domestic suppliers, require them to submit bids, and normally award the contract to the lowest bidder.

    • Affected by environmental factors

    • Non-economic factors considered :

      • Minority firms

      • Depressed firms

      • Small businesses