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CHAPTER 5
Consumer Behaviour,
Organisational
Markets and
Buyer Behaviour
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core ,by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
5-1
2
After reading this chapter you
should be able to:
• Outline the stages in the consumer decision
process.
Distinguish among three variations of the
consumer decision process: routine, limited, and
extended problem solving.
• Explain how psychological influences affect
consumer behaviour, particularly purchase
decision processes.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core ,by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
5-2
After reading this chapter you
should be able to:
• Identify major sociocultural influences on
consumer behaviour and their effects on
purchase decisions.
• Recognise how marketers can use knowledge
of consumer behaviour to better understand
and influence individual and family purchases.
• Distinguish among industrial, reseller, and
government markets.
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PPTs t/a Marketing: The Core ,by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
5-3
-7
After reading this chapter you
should be able to:
• Recognise key characteristics of organisational
buying that make it different from consumer
buying.
• Understand how buying centres and buying
situations influence organisational purchasing.
• Recognise the growing importance of online
buying in industrial, reseller, and government
markets.
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Slides prepared by Andrew Hughes, Australian National University
5-4
Consumer Behaviour
• This chapter examines consumer behaviour, the
actions a person takes in purchasing and using
products and services, including the mental and
social processes that come before and after these
actions.
• It is a very complex chapter so please read the
chapter carefully and use the concept checks to
ensure that you understand the theory.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core ,by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
5-5
Consumer Decision Making Process
•
•
•
1.
2.
3.
4.
5.
Behind the visible act of making a purchase lies an
important decision process.
The stages a buyer passes through in making
choices about which products and services to buy is
the purchase decision process.
This process has the five stages shown in Figure
5.1:
problem recognition,
information search,
alternative evaluation,
purchase decision and
postpurchase behaviour.
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5-6
Consumer Purchase Decision Process
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5-7
Problem Recognition: Perceiving a
Need
• Problem recognition, the initial step in the purchase
decision, occurs when a person realises that the
difference between what he or she has and what he
or she would like to have is big enough to actually do
something about it.
• The process may be triggered by a situation as
simple as opening up the refrigerator and discovering
that you’ve run out of orange juice or it could be more
complex such as deciding what university to go to or
car to buy.
• Marketers try to stimulate problem recognition by
using a variety of strategies and tactics.
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5-8
Information Search: Seeking Value
• After recognising a problem, a consumer begins to search for
information about what product or service might satisfy the
newly discovered need.
• First, you may scan your memory for previous experiences with
products or brands.
• This action is called internal search. For frequently purchased
products such as soap and toothpaste, this may be enough.
• Or a consumer may undertake an external search for
information, using personal, public or marketer sources of
information.
• This is especially needed when one does not have much past
experience or knowledge, the physical, social or financial risk of
making a bad decision is high, and the cost of gathering
information is low.
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5-9
Alternative Evaluation: Assessing
Value
• The information search stage clarifies the problem for the
consumer by (1) suggesting criteria, or points to consider, for the
purchase, (2) providing brand names that might meet the criteria
and (3) developing consumer value perceptions.
• A consumer’s evaluative criteria represents both the objective
attributes of a brand (such as a video display screen) and the
subjective ones (such as prestige) you use to compare different
products and brands.
• Firms try to identify and make the most of both types of
evaluative criteria to create the best value for consumers.
• These criteria are often emphasised in advertisements.
• Companies aim to be in the consumer’s evoked set for a
product, rather than the inept set.
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5 - 10
Purchase Decision: Buying Value
• Having examined the alternatives in the evoked set, you are
almost ready to make a purchase decision.
• Two choices remain: (1) from whom to buy and (2) when to
buy.
• The choice of which seller to buy from will depend on such
considerations as the seller’s location, your past experience
buying from the seller, and the return and/or exchange policy.
• Deciding when to buy is frequently determined by a number of
factors.
• Use of the Internet to gather information, evaluate alternatives
and make buying decisions has added a technological
dimension to the consumer purchase decision process.
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5 - 11
Postpurchase Behaviour: Value in
Consumption or Use
• After buying a product, the consumer compares it
with his or her expectations and is either satisfied or
dissatisfied.
• A company’s sensitivity to a customer’s consumption
experience strongly affects the value a customer
perceives after the purchase.
• Studies show that satisfaction or dissatisfaction
affects consumer communications and repeat
purchase behaviour.
• Many firms now provide customer feedback toll free
phone lines for consumer’s to provide feedback on
products and services.
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5 - 12
Involvement and Problem-Solving
Variations
• Sometimes consumers don’t engage in the five-step
purchase decision process.
• Instead, they skip or minimise one or more steps
depending on the level of involvement.
• The level of involvement that a consumer has in a
particular purchase depends on the personal, social
and economic consequences of that purchase to the
consumer.
• Products are classified as either low involvement, or
requiring little thought by the consumer about the
purchase process, or high involvement where the
consumer is highly involved in all aspects of
purchasing the product.
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5 - 13
Consumer Involvement
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5 - 14
Situational Influences
•
•
Often the purchase situation will affect the purchase
decision process.
Five situational influences have an impact on your
purchase decision process:
1.
2.
3.
4.
5.
the purchase task,
social surroundings,
physical surroundings,
temporal effects and;
antecedent states.
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5 - 15
Influences on the consumer
purchase decision process
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5 - 16
Concept Check
1. What is the first step in the consumer purchase
decision process?
2. The brands a consumer considers buying out of
the set of brands in a product class of which the
consumer is aware is called the ____________.
1. Problem Recognition
2. Evoked Set
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5 - 17
Psychological Influences on Consumer
Behaviour
• Psychology helps marketers understand why and
how consumers behave as they do.
• In particular, concepts such as motivation and
personality; perception; learning; values, beliefs and
attitudes; and lifestyle are useful for interpreting
buying processes and directing marketing efforts.
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5 - 18
Motivation and Personality
• Motivation is the energising force that stimulates behaviour to
satisfy a particular need.
• As consumer needs are the focus of the marketing concept,
marketers try to stimulate these needs.
• Maslow’s hierarchy of needs is the central theory for marketers
in needs theory.
• Personality refers to a person’s consistent behaviours or
responses to recurring situations.
• Although numerous personality theories exist, most identify key
traits such as assertiveness, extroversion, compliance,
dominance and aggression, among others.
• Personality characteristics are often revealed in a person’s selfconcept, which is the way people see themselves and the way
they believe others see them.
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5 - 19
Maslow’s Hierarchy of Needs
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5 - 20
Perception
• Perception is the process by which an individual
selects, organises and interprets information to
create a meaningful picture of the world.
• The average consumer operates in a complex,
information-rich environment.
• The human brain organises and interprets all this
information with a process called selective
perception, which filters the information so that only
some of it is understood or remembered or even
available to the conscious mind.
• Selective perception is linked with selective
exposure, selective retention, selective
comprehension and perceived risk.
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5 - 21
Learning
• Much consumer behaviour is learned. Consumers
learn which sources to use for information about
products and services, which evaluative criteria to
use when assessing alternatives, and how to make
purchase decisions.
• Learning refers to those behaviours that result from
(1) repeated experience and (2) reasoning.
• Some of the key learning theories are:
– Behavioural learning
– Cognitive learning
– Brand loyalty
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5 - 22
Values, Beliefs and Attitudes
• Values, beliefs and attitudes play a central role in
consumer decision making.
• An attitude is a ‘learned predisposition to respond to
an object or class of objects in a consistently
favourable or unfavourable way’.
• Attitudes are shaped by our values and beliefs, which
we develop in the process of growing up.
• Beliefs also play a part in attitude formation.
• Beliefs are one’s perception of how a product or
brand performs on different attributes.
• Beliefs are based on personal experience,
advertising, and discussions with other people.
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5 - 23
Lifestyle
• Lifestyle is a way of living that is identified by how people
spend their time and resources (activities), what they
consider important in their environment (interests), and
what they think of themselves and the world around them
(opinions).
• The analysis of consumer lifestyles, called
psychographics, has produced many insights into
consumer behaviour.
• For example, lifestyle analysis has proven useful in
segmenting and targeting consumers for new and
existing products.
• Tools such as VALS™ are useful in analysing how a
consumer’s lifestyle impacts their decision making
process.
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5 - 24
Concept Check
1.
2.
3.
The problem with the Mountain Buggy infant stroller was an
example of selective __________.
What three attitude-change approaches are most common?
What does lifestyle mean?
1. Comprehension
2. (1) Change beliefs about the extent to which a brand has certain
attributes,
(2) Change the perceived importance of attributes, and (3) Add
new attributes to the product.
3. Lifestyle is a way of living that is identified by how people spend
their time and resources (activities), what they consider
important in their environment (interests), and what they think of
themselves and the world around them (opinions).
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5 - 25
Sociocultural Influences on Consumer
Behaviour
• Sociocultural influences, which evolve from a
consumer’s formal and informal relationships with
other people, also have an impact on consumer
behaviour.
• These include personal influence, reference groups,
the family, culture and subculture.
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5 - 26
Personal Influence
• A consumer’s purchases are often influenced by the views,
opinions or behaviours of others.
• Two aspects of personal influence are important to marketing:
opinion leadership and word-of-mouth activity.
• Opinion leaders are individuals who have social influence over
others in their purchase decisions.
• Opinion leaders are more likely to be important for products that
provide a form of self-expression
• People influencing each other during conversations is called
word of mouth.
• Word of mouth is perhaps the most powerful information source
for consumers because it typically involves friends viewed as
trustworthy.
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5 - 27
Reference Groups
• Reference groups are people to whom an individual
looks as a basis for self appraisal or as a source of
personal standards.
• Reference groups affect consumer purchases
because they influence the information, attitudes and
aspiration levels that help set a consumer’s
standards.
• The different types of reference groups are:
– Membership groups
– Aspiration groups
– Dissociative groups
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5 - 28
Family Influence
• Family influences on consumer behaviour result from
three sources:
– consumer socialisation.
 This the process by which people acquire the skills, knowledge
and attitudes necessary to function as consumers.
– passage through the family life cycle.
 The family life cycle concept describes the distinct phases that
a family progresses through from formation to retirement, each
phase bringing with it identifiable purchasing behaviours.
– decision making within the family or household.
 Two decision making styles exist: spouse-dominant and joint
decision-making. With a joint decision-making style, both
husband and wife make most decisions. Spouse-dominant
decisions are those for which either the husband or the wife is
responsible.
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5 - 29
Culture and Subculture
• Culture refers to the set of values, ideas and attitudes
that are learned and shared among the members of a
group.
• Subgroups within the larger, or national, culture with
unique values, ideas and attitudes are referred to as
subcultures.
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5 - 30
Concept Check
1. What are the two primary forms of personal
influence?
2. Within Australia and New Zealand there is a
pronounced and diverse Asian subculture. Can
one make generalisations about the buying
patterns of Chinese, Japanese, Filipinos,
Koreans, Malaysians, Vietnamese and Thais in
Australasia?
1. Opinion leadership and word of mouth.
2. No as each of these groups exhibits
sophisticated social and cultural behaviours that
affect their buying patterns
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5 - 31
Organisational Buying
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5 - 32
Organisational Markets and Buyer
Behaviour
•
Understanding organisational markets and buying behaviour is
necessary for effective business marketing.
• Business marketing is the marketing of products to companies,
governments or not-for-profit organisations for use in the
creation of goods and services that they then produce and
market to others.
• Organisational buyers are those manufacturers, wholesalers,
retailers and government agencies that buy goods and services
for their own use or for resale.
• Organisational buyers are divided into three different markets:
1. industrial,
2. reseller and
3. government markets.
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5 - 33
Measuring Industrial, Reseller and
Government Markets
• The measurement of industrial, reseller and
government markets is an important first step for a
firm interested in determining the size of one, two or
all three of these markets around the world.
• This task has been made easier with the Australian
and New Zealand Standard Industrial Classification
(ANZSIC).
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5 - 34
Concept Check
1. What are the three main types of organisational
buyers?
2. What is the Australian and New Zealand
Standard Industrial Classification (ANZSIC)?
1. Industrial firms, resellers, and government units.
2. The ANZSIC is a list of common industry
definitions for Australia and New Zealand, which
make easier the measurement of economic
activity in the two member countries of the
Australia New Zealand Closer Economic
Relations Trade Agreement (ANZCERTA).
Copyright  2008 McGraw-Hill Australia Pty Ltd
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5 - 35
Characteristics of Organisational
Buying
• Organisations are different from individuals, so
buying for an organisation is different from buying for
yourself or your family.
• Some of the key characteristics are:
–
–
–
–
–
Derived demand
Fewer customers but larger purchases
Organisational buying objectives
Organisational buying criteria
Buyer-seller relationships and supply partnerships
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5 - 36
Characteristics of Organisational
Buying
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5 - 37
Concept Check
1. What is derived demand?
2. A supply partnership exists when _____________ .
1. Derived demand means that the demand for industrial
products and services is driven by, or derived from,
demand for consumer products and services.
2. A buyer and its supplier adopt mutually beneficial
objectives, policies, and procedures for the purpose of
lowering the cost or increasing the value of products and
services delivered to the ultimate consumer.
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5 - 38
The Organisational Buying Process
and the Buying Centre
• Organisational buyers, like consumers, engage in a
decision process when selecting products and
services.
• Organisational buying behaviour is the decisionmaking process that organisations use to establish
the need for products and services and identify,
evaluate and choose among alternative brands and
suppliers.
• There are important similarities and differences
between the two decision-making processes, which
can be seen by examining figure 5-14.
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5 - 39
Comparing the stages in
consumer and organisational
purchases
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5 - 40
The Buying Centre: A Cross-Functional
Group
• The buying centre is a group of people in an
organisation who participate in the buying process of
products for that organisation.
• Who makes up the buying centre in a given
organisation depends on the specific item being
bought.
• Researchers have identified five specific roles that an
individual in a buying centre can play.
• In some purchases the same person may perform
two or more of these roles.
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5 - 41
Roles in the Buying Centre
• Users are the people in the organisation who actually use the
product or service, such as a secretary who will use a new word
processor.
• Influencers affect the buying decision, usually by helping define
the specifications for what is bought.
• Buyers have formal authority and responsibility to select the
supplier and negotiate the terms of the contract.
• Deciders have the formal or informal power to select or approve
the supplier that receives the contract.
• Gatekeepers control the flow of information in the buying centre.
Purchasing personnel, technical experts and secretaries can all
help or prevent salespeople (or information) from reaching
people performing the other four roles.
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5 - 42
Buying Situations and the Buying
Centre
• The number of people in the buying centre largely
depends on the specific buying situation.
• Researchers who have studied organisational buying
identify three types of buying situations, called buy
classes.
• These buy classes vary from the routine reorder, or
straight rebuy, to the completely new purchase,
termed new buy.
• In between these extremes is the modified rebuy.
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5 - 43
Concept Check
1. What one department is almost always
represented by a person in the buying centre?
2. What are the three types of buying situations or
buy classes?
1. Purchasing department
2. Straight rebuy, modified rebuy, and new buy
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5 - 44
Online Buying in Organisational
Markets
• Organisational buying behaviour and business
marketing continues to change with the use of
Internet/Web technology.
• Organisations vastly outnumber consumers in terms
of both online transactions made and purchase
volume.
• A significant development in organisational buying
has been the creation and growth of online trading
communities, called e-marketplaces, that bring
together buyers and supplier organisations.
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5 - 45
Online Auctions in Organisational
Markets
• Online auctions have grown in popularity among organisational
buyers and business marketers.
• Many e-marketplaces offer this service. Two general types of
auctions are common: (1) a traditional auction and (2) a reverse
auction.
• In a traditional auction a seller puts an item up for sale and
would-be buyers are invited to bid in competition with each
other.
• A reverse auction works in the opposite direction from a
traditional auction. In a reverse auction, a buyer communicates
a need for a product or service and would-be suppliers are
invited to bid in competition with each other.
• As more would-be suppliers become involved, there is a
downward pressure on bid prices for the buyer’s business.
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5 - 46
Concept Checks
1. What are e-marketplaces?
2. In general, which type of online auction creates
upward pressure on bid prices and which type
creates downward pressure on bid prices?
1. E-marketplaces are online trading communities
that bring together buyers and supplier
organisations.
2. traditional auction; reverse auction.
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5 - 47
Finish
• Questions?
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5 - 48