CHAPTER 3

CONSUMER AND BUSINESS

DECISION MAKING

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 LEARNING OUTCOMES
LO 1 Explain why marketing managers should
understand consumer behavior
LO 2 Analyze the components of the consumer
decision-making process
LO 3 Identify the types of consumer buying
decisions and discuss the significance of
consumer involvement
LO 4 Identify and understand the factors that
affect consumer buying decisions
LO 5 Explain the differences between business and
consumer markets
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CONSUMER BEHAVIOR

Consumer Processes a consumer uses to

Behavior make purchase decisions, as
well as to use and dispose of
purchased goods or services;
also includes factors that
influence purchase decisions
and the product use.

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Understanding Consumer Behavior

consumers make
purchase decisions

Consumer
behavior = HOW

consumers use and

dispose of product

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CONSUMER DECISION-MAKING
PROCESS

Need Recognition

Information Search
Cultural, Social,
Individual and
Psychological Evaluation
Factors of Alternatives
affect
all steps Purchase

Postpurchase
Behavior
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NEED RECOGNITION
Result of an imbalance between actual and
desired states.

Internal Stimuli

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External Stimuli

Marketing helps consumers recognize an imbalance between present

status and preferred state.

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NEED RECOGNITION

Any unit of input affecting

STIMULUS
one or more of the
five senses:
sight
smell
taste
touch
hearing

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NEED RECOGNITION
Recognition of Unfulfilled Wants

• When a current product isn’t performing

properly
• When the consumer is running out of a
product
• When another product seems superior to
the one currently used

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INFORMATION SEARCH
Internal Information Search
u Recall information in memory

External Information search

u Seek information in outside environment
§ Nonmarketing controlled
ü Personal sources—family and friends
ü Public sources—mass media, consumer organizations

§ Marketing controlled
ü Commercial sources—advertising, Internet
ü Salesperson
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INFORMATION SEARCH
EXTERNAL INFORMATION SEARCHES

Need Less Need More

Information Information

Less Risk More Risk

More knowledge Less knowledge
More product experience Less product experience
Low level of interest High level of interest
Confidence in decision Lack of confidence

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INFORMATION SEARCH

Group of brands, resulting

EVOKED SET from an information search,
from which a buyer can
choose.

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EVALUATION OF ALTERNATIVES
AND PURCHASE
Evoked Set
Analyze product attributes

Use cutoff criteria

Rank attributes by
importance
Purchase!

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PURCHASE
The act by the consumer to buy the most preferred
brand

To buy
or not to buy...

Determines which attributes

are most important
in influencing a
consumer’s choice

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POSTPURCHASE BEHAVIOR

• Consumer satisfaction is a function of

consumer expectations and perceived
product performance.
– Performance < Expectations ----- Disappointment
– Performance = Expectations ----- Satisfaction
– Performance > Expectations ----- Delight

• Cognitive dissonance:
– Inner tension that a consumer experiences after
recognizing an inconsistency between behavior and
values or opinions
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POSTPURCHASE BEHAVIOR
CONSUMERS CAN REDUCE DISSONANCE BY:
• Seeking information that reinforces positive ideas
about the purchase
• Avoiding information that contradicts the purchase
decision
• Revoking the original decision by returning the
product
MARKETERS CAN MINIMIZE THROUGH:
• Effective Communication
• Follow-up
• Guarantees
Warranties
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Consumer Decision-Making Process

INDIVIDUAL

SOCIAL
CULTURAL

Need 1 Information 2 Evaluate 3 4

Purchase
Recognition Search Alternatives

PSYCHOLOGICAL

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Consumer postpurchase evaluation process

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TYPE OF CONSUMER BUYING
DECISIONS

Routine Limited Extensive

Response Decision Decision
Behavior Making Making

Less More
Involvement Involvement

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FIVE FACTORS INFLUENCING
DECISIONS

1. Level of consumer involvement

2. Length of time to make decision

3. Cost of good or service

4. Degree of information search

5. Number of alternatives considered

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CONTINUUM OF CONSUMER BUYING
DECISIONS

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ROUTINE RESPONSE BEHAVIOR

• Little involvement in selection process

• Frequently purchased low cost goods

• May stick with one brand

• Buy first/evaluate later

• Quick decision

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LIMITED DECISION MAKING

• Low levels of involvement

• Low to moderate cost goods

• Evaluation of a few alternative

brands

• Short to moderate time to

decide

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EXTENSIVE DECISION MAKING

• High levels of involvement

• High cost goods

• Evaluation of many brands

• Long time to decide

• May experience cognitive dissonance

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FACTORS DETERMINING
THE LEVEL OF CONSUMER INVOLVEMENT

Previous Experience

Interest

Perceived Risk of Negative

Consequences

Situation

Social Visibility

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MARKETING IMPLICATIONS OF
INVOLVEMENT

High-involvement Extensive and informative

purchases require: promotion to target market

In-store promotion,
eye-catching package
Low-involvement
design, and good displays.
purchases require: Coupons, cents-off,
2-for-1 offers

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Consumer Buying Decisions and Consumer Involvement

Previous experience
Interest
Perceived risk of
negative consequences
Situation
Social visibility

Extensive

Limited

Routine

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FACTORS INFLUENCING BUYING
DECISIONS

FACTOR INFLUENCING BUYING DECISIONS

CULTURAL SOCIAL PERSONAL PSYCHOLOGICAL

Culture Reference group Age and Lifecycle stage Perception

Subculture Opinion Leader Gender Motivation

Social Class Family Personality Learning

Self-concept Belief and Attitudes

Lifestyle

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CULTURAL FACTORS

Set of values, norms,

attitudes, and other
CULTURE meaningful symbols that
shape human behavior and
the artifacts, or products, of
that behavior as they are
transmitted from one
generation to the next.

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CULTURAL FACTORS

Values

Language

Myths
Components
of CULTURE Customs

Rituals

Laws

Material artifacts
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CULTURAL FACTORS

Culture is. . .

Pervasive

Functional

Learned

Dynamic

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CULTURAL FACTORS

A homogeneous group
SUBCULTURE of people who share elements of
the overall culture as well as
unique elements of their own
group
§ Malays, Indian, Chinese,
Kelantanese, Sabahans and
others

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CULTURAL FACTORS

A group of people in a society who

are considered nearly equal in
SOCIAL CLASS
status or community esteem, who
regularly socialize among
themselves both formally and
informally, and who share
behavioral norms.

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CULTURAL FACTORS
Social Class Measurements
Occupation

Income

Education

Wealth

Other Variables
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CULTURAL FACTORS
The Impact Of Social Class On
Marketing

1. Indicates which medium to use for

advertising

2. Helps determine the best distribution

for products

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SOCIAL FACTORS

Reference Groups

Opinion Leaders

Family Members

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SOCIAL FACTORS

REFERENCE
GROUP A group in society
that influences an
individual’s
purchasing behavior.

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SOCIAL FACTORS

Primary

Direct
Secondary
Reference
Groups
Aspirational

Indirect
Nonaspirational

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SOCIAL FACTORS
Influences of Reference Groups
1. They serve as information sources and
influence perceptions.

2. They affect an individual’s aspiration levels.

3. Their norms either constrain or stimulate

consumer behavior.

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SOCIAL FACTORS

An individual who influences

OPINION
the opinion of others.
LEADERS

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SOCIAL FACTORS
Opinion Leaders
Marketers are looking to Web logs,
or blogs, to find opinion leaders

§ Teenagers
§ Movie stars
§ Sports figures
§ Celebrities

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SOCIAL FACTORS
FAMILY
Purchase Process Roles in the Family

§ Initiators
§ Influencers
§ Decision Makers
§ Purchasers
§ Consumers

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Relationships among Purchasers and
Consumers in the Family

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Social Factors

Direct Indirect
Reference
Groups Primary Secondary Aspirational Nonaspirational

Opinion People
Celebrities
Leaders you know

Socialization Process
Family Initiators Decision Makers Consumers
Influencers Purchasers

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INDIVIDUAL INFLUENCES

Personality
Age
Gender Self-Concept
Life Cycle
Lifestyle

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INDIVIDUAL INFLUENCES

GENDER

MALE FEMALE

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INDIVIDUAL INFLUENCES

Age & Life

Cycle

Personality,
Self concept,
Lifestyle

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INDIVIDUAL INFLUENCES

§ Personality refers to the unique psychological

characteristics that lead to consistent and lasting
responses to the consumer’s environment

§ Self-
Self-concept is how consumers perceive themselves.
§ Self-concept theory suggests that people’s possessions
contribute to and reflect their identities.
§ An individual’s products purchased , stores patronized,
and credit cards held reflect their identity. For
example, the car he or she drives reflects a person’s
self-image.

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INDIVIDUAL INFLUENCES
• People within the same subculture, social
class, and occupation may have different
lifestyles.
• Lifestyle:
– Pattern of living as expressed in
psychographics.
• Activities
• Interests
• Opinions

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PSYCHOLOGICAL INFLUENCES

Perception

Motivation

Learning

Beliefs & Attitudes

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PSYCHOLOGICAL INFLUENCES

PERCEPTION Process by which people

select, organize, and
interpret stimuli into a
meaningful and coherent
picture.

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PSYCHOLOGICAL INFLUENCES

PERCEPTION
Selective Consumer notices certain stimuli
Exposure and ignores others

Consumer changes or distorts

Selective
information that conflicts
Distortion
with feelings or beliefs

Consumer remembers only

Selective
that information that
Retention
supports personal beliefs
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PSYCHOLOGICAL INFLUENCES
Marketing Implications of PERCEPTION
§ Important attributes
§ Price
§ Brand names
§ Quality and reliability
§ Threshold level of perception
§ Product or repositioning changes
§ Foreign consumer perception
§ Subliminal perception
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PSYCHOLOGICAL INFLUENCES

MOTIVATION

Maslow’s
Hierarchy A method of classifying
of Needs human needs and motivations
into five categories in
ascending order of
importance.

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PSYCHOLOGICAL INFLUENCES

Maslow’s Hierarchy of Needs

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PSYCHOLOGICAL INFLUENCES

TYPES OF LEARNING

An experience changes
Experiential
behavior

Not learned through direct

Conceptual
experience

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PSYCHOLOGICAL INFLUENCES

Stimulus Generation and Discrimination

A form of learning that

occurs when one
Stimulus response is extended to
Generalization a second stimulus
similar to the first.

A learned ability to
Stimulus differentiate among
Discrimination similar products.

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PSYCHOLOGICAL INFLUENCES

BELIEFS AND ATTITUDES

An organized pattern of
knowledge that an individual holds
Belief as true about his or her world.

A learned tendency to respond

consistently toward a given object.
Attitude

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PSYCHOLOGICAL INFLUENCES

Changing Attitudes
§ Change beliefs about the
brand’s attributes
§ Change the relative importance
of these beliefs
§ Add new beliefs

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Psychological Factors

Selective Exposure
Perception
Selective Retention Selective Exposure

Needs
Motivation
Psychological Safety Social Esteem Esteem

Stimulus Stimulus
Learning
Generalization Discrimination

Changing Changing
Beliefs & Adding
Beliefs about Importance of
Attitudes Attributes Beliefs
New Beliefs
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WHAT IS BUSINESS MARKETING

Business The marketing of goods and

Marketing services to individuals and
organizations for purposes
other than personal
consumption.

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BUSINESS PRODUCT

The key is intended use.

Business Products:
§ Are used to manufacture other products
§ Become part of another product
§ Aid the normal operations of an organization
§ Are acquired for resale without change in form

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BUSINESS VERSUS CONSUMER
MARKET
Characteristic Business Market Consumer Market
Demand Organizational Individual
Volume Larger Smaller
# of Customers Fewer Many
Location Concentrated Dispersed
Distribution More Direct More Indirect
Nature of Buy More Professional More Personal
Buy Influence Multiple Single
Negotiations More Complex Simpler
Reciprocity Yes No
Leasing Greater Lesser
Promotion Personal Selling Advertising
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Business Marketing
CONSUMER
BUSINESS
cupboards cupboards

Coffee pot

oven

oven

folder Teddy bear

photocopier folder
and pen
and pen
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BUSINESS BUYING BEHAVIOR

Buying Centers

Evaluative Criteria
Aspects of
Business
Buying Buying Situations
Behavior
Business Ethics

Customer Service

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