Understanding Consumer Behaviour Patterns

Understanding Consumer and Business Markets

Chapter 5 Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

The consumer market  Geographic distribution, frequently divided into rural, urban, and suburban.  Demographics, the vital statistics that describe a population. In particular: • Age. • Gender. • Family life cycle. • Education. • Income distribution. • Ethnicity.

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Family life cycle  Family life cycle will determine the purchase behaviour of individuals and reason for purchase.  Single parent and two-parent family.  Young couples no children.  Family (usually two adults, two young children).  Family with teenagers.  Multi-cultural (or mixed) family. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Situational influences  Situational influences are the temporary forces associated with the immediate purchase environment that affect behaviour • When consumers buy—the time influence. (day, week, season). • Where consumers buy—the place a decision is made (home, point of purchase). • How consumers buy—the way in which consumers buy (bulk etc). Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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SOCIAL AND GROUP FORCES Culture Subculture Social class Reference groups Family and households

PSYCHOLOGICAL FORCES Motivation Perception Learning Personality Attitude

BUYING-DECISION PROCESS INFORMATION Commercial sources

Need recognition Identification of alternatives Evaluation of alternatives Purchase and related decisions

Social sources

Post-purchase behaviour

SITUATIONAL FACTORS When consumers buy Where consumers buy Why consumers buy Conditions under which consumers buy

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Consumer buying behaviour influences  There are five main Buying Behaviour factors which influence consumer’s decision-making. • Motivation. • Perception. • Learning. • Personality. • Self-concept. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Consumer buying behaviour influences (cont.)

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Four demand characteristics that differentiate the business market from the consumer market  Demand is derived from the demand for the ultimate consumer products in which the business product is finally used (e.g. steel).  In the short run demand is inelastic, that is, demand for a product responds very little to changes in price when: • The cost of a single part or material is a small portion of the total cost of the finished product. • If the part or material has no Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix substitute. Slides prepared by Joe Rosagrata 5-8 Copyright © 1997 by The McGraw-Hill Companies, Inc.

Four demand characteristics that differentiate the business market from the consumer market (cont.)  Demand is widely fluctuating, meaning that demand for most classes of business goods fluctuates considerably more than the demand for consumer products.  The buyers are well informed and know the relative merits of alternative sources of supply and competitive Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix products.Slides prepared by Joe Rosagrata 5-9

Influences on business-market demand  The number and types of potential business users.  Their buying power,  buying motives,  and buying habits.

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Key differences between the business market (BM) and consumer (CM) market  Small number of BMs.  BMs have larger purchasing power and buy in quantity.  BMs are concentrated. CMs are not. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Key differences between the business market (BM) and consumer (CM) market (cont.)  Sellers deal direct with business users.  BMs are usually regionally concentrated.  BMs can be vertically or horizontally concentrated.  BM’s buying motives are rational and Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata 5-12 purchase is methodical and objective.

Types of buying situations 1. New task  New purchase or product category.  More people involved in new purchase.  Extensive information must be collected and evaluated on alternative products.  Seller displays creative selling ability in satisfying buyer needs. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Types of buying situations (cont.) 2. Straight re-buy  Information needs are minimal  There is no great consideration of alternatives.  Buying decision made in the purchasing department e.g. purchasing of office supplies.

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Types of buying situations (cont.) 3. Modified re-buy  Situation in which the buyer wants to change (modify) the product specifications, price, terms, or suppliers.

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The buying centre  A Buying Centre is all the individuals who play a part in the various buying roles and who influence buying decisions, determine product specification and make the buying decision • Users—people who actually use the good or service. • Influencers—people who set the specifications of, and help determine aspects of the buying decision because of their expertise, financial position, or political power. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Types of buying situations (cont.)  Deciders—the people who make the actual buying decision regarding the product and supplier.  Gatekeepers—people who control the flow of purchasing information within the organisation, as well as between the firm and potential vendors.  Buyers—people who select the suppliers, arrange the terms of the sale and process the actual purchase orders. Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Buying patterns of business users        

Direct purchase. Frequency of purchases. Size of order. Length of negotiated period. Reciprocity arrangements. Service expectations. Dependability of supply. Leasing instead of buying.

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