What are the three models that explain how individuals evaluate purchasing alternatives?

Buyer Behaviours

Consumer decision-making process: (5)

3.1 What elements are involved in internal and external information

searches by

consumers, as part of the purchasing process?

1. Problem recognition

-Occurs when the consumer experiences a need or want.

-Problem/Gap exists between an individual’s current state and desired state.

2. Information search

>Internal search; i.e. The consumers think about the brands they are willing to consider.

>External search;

Friends/relatives/books/the internet/etc.

-The amount of time a consumer spends on

an external search depends on three factors:

Ability, motivation, and costs versus benefits.

Involvement: The extent to which a

stimulus or task is relevant to

a consumer’s existing needs,

wants, or values.

Need for cognition: A personally characteristic and individual displays when he or she

engages in and enjoys mental activities.

Enthusiasm for shopping: Customers who like to shop will undertake a more in-depth

search for details about goods and services.

Marketing experts utilize three models of the information search process:

Consumer attitudes: A mental position taken toward a topic, person, or event that

influences

the holder’s feelings, perceptions, learning processes, and subsequent

behaviours.

Three components: -Affective; i.e. feelings/emotions

-Cognitive; i.e. person’s understanding/interpretations

-Conative; i.e. individual’s intentions/actions/behaviours.

Common sequence; Cognitive -> Affective -> Conative

Alternatives; Affective -> Conative -> Cognitive

Conative -> Cognitive -> Affective

No matter which path a consumer takes to develop attitudes,

each component will be present to some extent!

Consumer values: Strongly held beliefs about various topics or concepts.

>Some common personal values:

• Comfortable life

• Equality

• Excitement

• Freedom

• Fun, exciting life

• Happiness

• Inner peace

• Mature love

• Personal accomplishment

• Pleasure

• Salvation

• Security

• Self-fulfilment

• Self-respect

• Sense of belonging

• Social acceptance

• Wisdom

Cognitive mapping: Simulations of the knowledge structures embedded in an individual’s

brain.

Presentation on theme: "Buyer behaviour."— Presentation transcript:

1 Buyer behaviour

2 Learning objectives What elements are involved in internal and external information searches by consumers, as part of the purchasing process? What three models explain how individuals evaluate purchasing alternatives? What trends are affecting the consumer buying environment? How do the roles played by various members of the buying center and the factors that influence them impact business purchases?

3 Learning objectives What types of business-to-business sales are made?
What are the steps of the business-to-business buying process? How does dual channel marketing expand a company's customer base and its sales? How can a company overcome international differences when adapting to buying processes?

4 Overview Reviews consumer buyer behaviours and b2b buyer behaviours
Consumer purchasing processes include five steps; however, two of those steps are most important from an IMC perspective: (1) the information search stage and (2) the evaluation of alternatives stage. These two steps are described in detail. Next, the consumer buying environment is described.

5 Learning Objective # 1: What elements are involved in internal and external information searches by consumers, as part of the purchasing process?

6 Information search There are many motives that lead to the search for information, including: Dissatisfaction with the last purchase The desire to try a new brand or product for novelty or variety The desire to expand an information search after hearing about a new brand or a different brand from a friend or because of a positive response to an advertisement

7 Internal search An internal search takes place when the consumer mentally recalls images of products that might fulfill or meet the need. A major objective is to build equity so that the company's brand will be recalled during an internal search

8 External search External information comes from many sources, including: Friends and relatives Expert consumers Books, magazines, newspapers, and searches of the internet Advertisements Exposures to public relations activities In-store displays Salespeople

9 Factors that define external search
Ability to search Motivation Cost Perceived Benefits The ability to search, which depends on the person’s educational level combined with specific knowledge of the product category and the brands being offered. Motivation, such that the greater the motivation, the greater the extent of external search. Motivation is determined by: The consumer’s level of involvement (enduring versus situational) The customer’s need for cognition (low versus high) The customer’s level of shopping enthusiasm (low versus high) Costs, the cost of the search consists of several items: The actual cost of the good or service. The subjective costs associated with the search, including the time spent and the anxiety experienced while making a decision. The opportunity cost of forgoing other activities to search for information. 4. Perceived benefits of the search, the higher the perceived benefits increase the tendency to search. The four factors which make up an external search (ability, motivation, costs, and benefits) are normally all considered at the same time.

10 Question for Students: Which of these four factors influences you the most when shopping?

11 Some additional concepts to consider in the information search process
Consumer attitudes Consumer values Cognitive mapping

12 Consumer attitudes An attitude is a mental position taken toward a topic, person, or event, which influences the holder’s feelings, perceptions, learning processes, and subsequent behaviors. An attitude consists of three components: The affective component contains the feelings or emotions a person has about the object, topic, or idea. The cognitive component refers to a person’s mental images, understanding, and interpretations of the person, object, or issue. The conative component is an individual’s intentions, actions, or behavior.

13 Sequence of events that takes place as an attitude is formed
cognitive -> affective -> conative affective -> conative -> cognitive conative -> cognitive -> affective Attitudes are shaped, in part, by an individual’s personal values

14 Consumer values Values are strongly held beliefs about various topics or concepts and lead to the judgments that guide personal behaviors. By appealing to the basic values, marketers hope to convince prospective customers that their products can help them achieve a desirable outcome.  In terms of consumer decision-making processes, both attitudes and values are helpful to marketing experts

15 Cognitive mapping Cognitive maps are simulations of the knowledge structures embedded in an individual’s brain. These structures contain a person’s: Assumptions Beliefs Interpretations of facts Feelings People use their knowledge structures to help them interpret new information and to determine an appropriate response to fresh information or a novel situation

16 Example of a cognitive map
Cognitive Linkages Besides initial linkages, other features of cognitive maps are present. These include: Levels and layers, meaning that cognitive processing occur on many levels using highly complex mechanisms. Processing New Information New information affects linkages that already exist. In situations in which a message has no current linkages, a new map will evolve in the person’s mind. Retaining Information Hearing something once usually is not enough to cause it to be retained in a person’s memory because of the difference between short-term recall and long-term memory. New Concepts Another way a consumer can process information is to link the message to a new concept. The individual can add a link, ignore or forget the message, or recall the message later. Marketing Messages When a company attempts to introduce consumers to a new brand, the advertisements and other marketing messages should repeat the name of the product several times during the presentation to improve the chances it will be recalled. Figure 3.5 displays the roles of marketing messages in cognitive mapping.

17 Question for Students: Can you imagine a cognitive map of one of your recent purchases?

18 Learning Objective # 2: What three models explain how individuals evaluate purchasing alternatives?

19 Evaluation of Alternatives
Three models portray the nature of the evaluation process. The evoked set approach. The multi-attribute approach. Affect referral. Lets look at them one by one

20 Evoked set approach A person’s evoked set consists of the brands that are considered in a purchasing situation. Two additional components of evoked sets are part of the evaluation of purchase alternatives: The inept set consists of the brands that are part of a person’s memory which are not considered because they elicit negative feelings. The inert set holds the brands that the consumer is aware of but the individual has neither negative nor positive feelings about the products.

21 The Multi-attribute Approach
The key to understanding this model is noting that consumers often examine sets of attributes across sets of products or brands. The multi-attribute model assumes that a consumer’s attitude toward a brand is determined by: The consumer’s beliefs about a brand’s performance on each attribute The importance of each attribute to the consumer The higher a brand is rated on attributes that are important to the consumer, the more likely it becomes that the brand will be purchased.

22 Affect Referral With this method, a consumer chooses the brand which he or she likes the best. The individual does not evaluate the other brands and often does not even think about which attributes are important. Two things explain why consumers rely on affect referral: It saves mental energy. The multi-attribute model may have been utilized previously. Thus, the person has already spent a great deal of time considering various product attributes, deciding which attributes were most critical, and reaching a decision.

23 Question for Students:
Can you remember your last purchase using an affect referral type of approach?

24 What trends are affecting the consumer buying environment?
Learning Objective # 3: What trends are affecting the consumer buying environment?

25 Trends in Consumer Buying Environment
Active, Busy Lifestyles Many people would prefer more time to more money and possessions. Convenience items are in higher demand. Emphasis on Health Two outcomes of this trend are: A blossoming interest in health products. The desire to maintain a youthful appearance. Marketers can create messages about the healthy aspects of products

26 Trends in Consumer Buying Environment
Diverse Lifestyles A wide diversity exists in the adult paths individuals take and the living arrangements. Divorce and remarriage alter many family units. Divorcees, or second chancers, tend to develop a new outlook on life. They have higher incomes and are more content with life. The number of openly lesbian, gay, bisexual, and transgender (LGBT) has grown to approximately 5 percent to 10 percent of the population.

27 Trends in Consumer Buying Environment
Age Complexity Some attitudes and values that are shifting at a cultural level include: Those associated with Young people "growing up" more quickly. Those associated with Older people refusing to "grow old." Experience Pursuits Indulgences - expensive dinners, bring feelings of comfort and reassurance. Self-rewarding activities make the consumer feel that all the work and effort is “worth it.”

28 Trends in Consumer Buying Environment
Communication Revolution Advances in telecommunications, primarily social media and smartphones, have impacted consumers all over the world and have created significant changes in the way individuals communicate with each other, with brands, and with companies. These technologies have changed the way brands and firms are influenced by word-of-mouth communication, and can be used to engage consumers and stimulate positive endorsements. Gender Complexity Roles of males and females continue to evolve.

29 Learning Objective # 4: How do the roles played by various members of the buying center and the factors that influence them impact business purchases?

30 Opening Signet Before we look at the roles, we need to know that business-to- business purchases are completed by people. Many of the processes involved in making a purchasing decision apply to both consumers and business buyers. Buying Center The group of individuals involved in the buying decision is called the buying center. The buying center consists of five different subsets of individuals playing various roles in the process.

31 Five Roles involved in the Buying Center
Users are the members of the organization who actually use the product or service. Buyers are the individuals who are given the formal responsibility of making the purchase. In larger organizations, buyers are either purchasing agents or members of the purchasing department. Influencers are the people who shape purchasing decisions by providing the information or criteria utilized in evaluating alternatives. Deciders are the individuals who authorize decisions. Gatekeepers are the people who control the flow of information to members of the buying center. The gate-keeping function can be performed by several people rather than one individual.

32 Factors Affecting Business Buying Centers
The behaviors of each member in the buying center are influenced: Organizational factors Individual factors

33 Organizational Factors
Company’s goals Operating environment (recession, growth period, lawsuits pending, etc.) Finances and capital assets Market position Quality of the company’s human resources Country in which the firm operates Some organizations have highly centralized purchasing programs although others are highly decentralized. Studies of organizational decision making indicate that employees tend to adopt heuristics, which are decision rules designed to quickly eliminate as many options as possible. One decision rule often employed is called satisficing, which means that when an acceptable alternative has been identified, it is taken and the search is completed.

34 Individual Factors Personality Roles Motivation Level of Power Risk
Level of Involvement Personal Objectives Personality Personality features include introversion, decisiveness, forcefulness, ego. Roles Roles and perceived roles, influenced by age, heredity, ethnicity, and also by the role within the buying center. Motivation Motivational levels, which depend on the match between the individual’s goals and the organization’s goals. Level of Power The level of power depends on the person’s role in the buying center, official position in the organization, and the impact of the purchase decision on a specific job. Risk Attitudes toward risk result in many vendors being chosen because buyers believe the choice has the lowest risk and risk avoidance is common. Level of Involvement Levels of cognitive involvement means individuals with higher levels of cognitive capacity want more information prior to making decisions and ask more questions when interacting with a sales rep. Personal Objectives Personal objectives are tied to motives, personality, perceptions of risk, and the other individual factors and can lead buyers to make purchases that help them politically in the organization.

35 What types of business-to-business sales are made?
Learning Objective # 5: What types of business-to-business sales are made?

36 Three Types of Business-to-Business Sales
Straight rebuy, which occurs when the firm has previously chosen a vendor and wishes to make a reorder. It tends to be a routine process. Modified rebuy, where the company needs to consider and evaluate alternatives. Reasons for this include: Buyers are dissatisfied with a current vendor. A new company offers what is perceived by a member of the buying center to be a better buy. The end of a contractual agreement is reached When a company purchases a product or service with which they have only limited or infrequent experience. New task, where the company is buying a product or service for the first time and the product involved is one with which they have no experience.

37 What are the steps of the business-to- business buying process?
Learning Objective # 6: What are the steps of the business-to- business buying process?

38 The Business-to-Business Buying Process
Identification of a need. Establishment of specifications. Identification of alternatives. Identification of vendors. Evaluation of vendors. Selection of vendor(s). Negotiation of purchase terms Let us discuss them one by one

39 Identification of Needs
Individual buyers and members of individual firms recognize company needs on a daily basis. Needs in the business world are often created by derived demand, which is based on, linked to, (or derived from) the production and sale of some other consumer good or service.

40 Establishment of Specifications
Specifications are formulated by experts. Specifications are usually written down and distributed internally to those in the buying center and are communicated to vendors.

41 Identification of Alternatives
One primary issue is a choice regarding whether or not the good or service can be provided or created internally. The primary task involved in identifying alternatives is to consider all of the ways in which a need can be met.

42 Identification of Vendors
In most business situations, written, formal bids are required. A member of the buying center is normally chosen to compile files of vendors that submit proposals. The offers are circulated to all of the members of the buying center that have input into the final decision.

43 Vendor Evaluation Evaluations of vendors normally occur at three levels: An initial screening of proposals. Undertaking a vendor audit. Members of the audit team normally include an engineer, someone from operations, a quality control specialist, and members of the purchasing department. Sharing vendor audit information with various members of the buying center.

44 Vendor Selection Once the choice is made, there are still items to be completed before shipment begins, including notifying the companies that did not win the bid.

45 Negotiation of Terms In most purchasing situations, negotiating terms is merely a formality, because most of the conditions have already been worked out. When the final agreement is set, goods are shipped and/or services are provided.

46 Post Purchase Evaluation
In the business-to-business arena, the post- purchase phase represents a marketing opportunity. Vendors that provide high-quality products, follow-up, and service often move into a straight rebuy situation.

47 Learning Objective # 7: How does dual channel marketing expand a company's customer base and its sales?

48 Dual Channel Marketing
Dual channel marketing occurs when firms sell virtually the same goods and/or services to both consumers and businesses. Dual marketing channels arise for several reasons. A product is first sold in the business market and then is adapted to the consumer market. As sales grow, economies-of-scale can be created by selling to a new market.

49 Strategies/ Types for Dual Channel Marketing
Spin off Sales One type of dual channel marketing results from spin-off sales, in which individuals who buy a particular product at work and have positive experiences with the product purchase another one for personal use. Marketing Decisions When there are substantial differences between the two channels, the typical tactics are to: Use different communication messages Create different brands Use multiple channels or different channels

50 Tactics to Use Tactics that should be used include:
Integrating communications messages Selling the same brand in both markets Scanning both markets for dual marketing opportunities

51 Learning Objective # 8: How can a company overcome international differences when adapting to buying processes?

52 International Implication
The importance of a powerful brand rises when a company commences with international operations. A visible global brand is one key to success in international business-to-business marketing.

53 Critical Thinking Assignment
For college students and other individuals with compulsive buying behaviors, a primary influence was the family. Often one or both parents were compulsive shoppers. Families that displayed other forms of dysfunctional behaviors such as alcoholism, bulimia, extreme nervousness, or depression produced children who were more inclined to exhibit compulsive shopping behaviors. Why would dysfunctional behaviors among parents produce compulsive shopping behavior among children? Another component of compulsive buying behaviors is self-esteem. Again, self-esteem is partly inherited but also develops in the home environment. How would self-esteem be related to compulsive shopping behaviors? What other influences other than family might contribute to compulsive shopping behaviors? If an individual has a tendency to be a compulsive shopper, what can (or should) be done?