UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process

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Introduction to Business MGT 211

LESSON 28

UNDERSTANDING CONSUMER BEHAVIOR

Marketers study consumer buying behavior to learn what makes individuals buy one product

instead of another. Consumer markets consist of individuals or households that purchase

goods and services for personal use. Issues to be considered are the differences between

organizational and consumer markets, the buyer's decision process, and the factors that affect

that decision process.

Influences on Consumer Behavior

Consumer behavior is essentially the study of why consumers purchase and consume

products. Four key factors influence consumer behavior:

Psychological: Motivations, perceptions, ability to learn, attitudes

ii.

Personal: Lifestyle, personality, economic status

iii.

Social: Family, opinion leaders, reference groups (e.g. friends,

associates)

iv.

Cultural: Culture, subculture, social class

The Consumer Buying Process

One way to look at the psychology of buying is to understand the decision-making process

people go through when making a purchase. Deciding what to buy is a problem-solving

process. Sometimes consumers become

Brand Loyal to specific products based on the satisfaction they have received from previous

purchases. Nevertheless, consumers decide what to purchase by gathering information to

help them make a choice. The more complex the problem, the more information they are likely

to seek. The steps in the process usually follow this sequence:

Problem/Need recognition: The consumer buying process begins with recognizing a

problem or need. Needs often arise when our personal circumstances change, creating

windows of opportunity for marketers (e.g. getting married, entering the workforce, etc.).

ii.

Information seeking: Sources of information can range from personal sources, to

marketing sources, to public sources, to experience. Depending on the product,

information seeking ranges from superficial (e.g. "Where is the soft drink machine?") to

extensive (e.g. library research).

iii.

Evaluation of alternatives: This step is essentially a matching process: How do the

attributes of the products you are considering match with your needs and wants? Here,

too, the evaluation process can range from brief to protract.

iv.

Purchase decision: Purchase decisions are typically based on a combination of rational

and emotional motives. Rational motives are based on logical evaluation of product

attributes (e.g. cost, quality, usefulness). Emotional motives are based on non-objective

factors (e.g. "All my friends have 4-inch high heel shoes!").

Post-purchase evaluation: This includes everything that happens after the sale.

Satisfied customers are likely to repurchase products they have used and enjoyed, while

unhappy customers are not only unlikely to repurchase, but also are prone to broadcast

their negative experience to other potential consumers.

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Introduction to Business MGT 211

Organizational Marketing and Buying Behavior

a. Organizational Markets can be divided into three main subgroups:

Industrial/commercial market (companies that buy to produce their

own goods and services such as Toyota);

ii.

Reseller market such as wholesalers like Ingram Micro, which

wholesales computers; retailers such as Ann Taylor

iii.

Government and Institutional market including Federal, State and

Local governments, hospitals, churches, museums, and charitable

organizations. Products sold to organizational markets include raw

materials and highly complex manufactured goods such as printing

presses, telecommunications systems, and consulting services.

Organizational buyers are quite different from consumer purchasers:

Professionals: They are trained in the field of purchasing and

negotiating, and they typically use formal contracts.

ii.

Specialists: They are often specialists in a line of products (e.g. a drug

store buyer might specialize in personal care products).

iii.

Experts: They are often experts (or at least very knowledgeable) about

the products they are buying. The buyer-seller relationship is often much

closer. The development of a long-term connection is beneficial to both

parties.

The International Marketing Mix

Entering foreign markets, a firm must reconsider-and often must adjust-each element of the

marketing mix:

Products --- Must the products be adapted? Redesigned? Recreated?

Some products can be sold abroad with virtually no changes, while other products need to be

adapted to fit the needs of the foreign buyer.

Pricing --- Pricing decisions must include all elements considered domestically, but also

transportation and delivery costs, and exchange rates.

Distribution --- Gaining a distribution foothold is often expensive and time-consuming.

Purchasing local businesses can help in this regard.

Promotion --- Elements of promotional messages should be matched to the customs and

values of each country.

Many standard U.S. promotional devices do not succeed in other countries. Marketers must

consider differences in language and culture when promoting products abroad.

Small Business and the Marketing Mix

Small businesses also face special considerations in terms of the marketing mix:

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Introduction to Business MGT 211

Products --- Some new products and firms are doomed at the start because few consumers

want or need what they have to offer. A thorough understanding of what customers want has

paid off for many small firms.

Is there really a consumer need? How can the products be tailored to better meet the need?

(Research can be very helpful in this regard.)

Pricing --- Small business owners must accurately forecast operation expenses. Do prices

truly cover the costs of running the business? Haphazard pricing that is often little more than

guesswork can sink even a firm with a good product. When small businesses set prices by

carefully assessing costs, many earn very satisfactory profits.

Distribution --- Perhaps the most important distribution issue for small businesses is location,

which can help attract and retain customers. Problems in arranging distribution can make or

break a small business. The ability of many small businesses to attract and retain customers

depends on the choice of location.

Promotion --- Promotional expenses should be considered a necessity. Many small

businesses are ignorant when it comes to the methods and cost of promotion. Successful

small businesses plan for promotional expenses as part of start-up costs. Targeted promotion

(e.g. through trade associations) can be very cost-effective.

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