CHAPTER III

CONSUMER AND MARKET BEHAVIOR

Objectives:
Understand and Analyze:
1. Concept of consumer buying behavior
2. Factors influencing consumer behavior
3. Consumer buying behavior process
4. Hospitality Organizational customer

What is Consumer Behavior?

Consumer Buying Behavior refers to the buying behavior of final consumers, both individual and households,
who buy goods and services for personal consumption. Buying Behavior is the decisive process of people
involved in buying and using products.
Factors Influencing Consumer Behavior "CulSoPePsy"
1. Cultural Factors "CuSuSo"
A. Culture. Culture is a factor that influences any behavior and is the most cause of a person’s wants
and behavior. Culture refers to the set of values, ideas, and attitudes which are accepted by a
homogenous group of people and transmitted to the next generation.
B. Subculture. Each culture contains smaller subcultures, groups of people with shared value systems
based on common experiences and situations.
C. Social Class. These are relatively permanent and ordered divisions in a society whose members
share similar values, interests, and behavior. Social Class influences several aspects of our lives, for
example upper middle-class people prefers luxury accommodation. Social class determines to some
extent, the types of quality, and quantity of products that a person purchase or uses.
2. Social Factors "GrOW FaR"
A. Groups. Groups that have a direct influence and to which a person belongs are called membership
groups. In contrast, reference groups serve as direct (face-to-face) or indirect points of comparison
or reference in forming a person’s attitudes or behavior.
B. Word-of-mouth influence and buzz marketing. The personal words and recommendations of
trusted friends, associates, and other consumers tend to be more credible than those coming from
commercial sources.
C. Online Social Networks. These networks are online communities where people socialize or
exchange information and opinions. Social networking media range from blogs to social networking
media range from blogs to social networking sites such as Facebook and YouTube to entire virtual
worlds, such as second life.
D. Family. Family members have a strong influence on buyer behavior. Marketers must understand that
many family decisions are made by the family unit. Consumer behavior starts in the family unit.
E. Role and Status. A role consists of the activities that a person is expected to perform according to
the persons around him or her. Each role carries a status reflecting the general esteem given to it by
society. People often choose products that show their status in society.
3. Personal Factors "AEOLiPe"
A. Age and life-cycle stage. The types of goods and services people buy change during their lifetimes.
As people grown older and mature the products, they desire change. The makeup of the family also
affects purchasing behavior. For example, families with young children dine out at fast-food
restaurants.
B. Occupation. A person’s occupation affects the goods and services bought.
C. Economic situation. A person’s economic situation greatly affects product choice and the decision
to purchase a product.
D. Lifestyle. A person’s pattern of living as expressed in his or her activities, interests, and opinions also
influence his or her buying decisions.
 E. Personality. Each person’s personality influences his or her buying behavior. By personality we
mean distinguishing psychological characteristics that disclose a person’s relatively individualized,
consistent, and enduring responses to the environment.
4. Psychological Factors "MoPeLeBe"
A. Motivation. A need becomes a motive when it is aroused to a sufficient level of intensity. Creating a
tension state causes a person to act to release the tension.
B. Perception. Perception is the process of selecting, organizing and interpreting information inputs to
produce meaning. Through perception, we chose what information to pay attention to, then organize
it and interpret it.
C. Learning. Learning describes changes in a person’s behavior arising from experience.
D. Beliefs and attitudes. A belief is a descriptive thought that a person holds about something. An
attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an
object or an idea.
Buyer Decision Process "NIEPP"

Need Information Evaluation of Purchase Postpurchase

Recognition Search Alternatives Decision behavior

1. Need Recognition. The buying process starts when the buyer recognizes a problem or need.
2. Information Search. A stirred consumer may or may not search for more information. There are different
sources of customer or consumer information – Personal sources (friends, family member, and other
social connections), commercial sources (advertisements and salespersons), Internet thru search
engines and social medial.
3. Evaluation of Alternatives. In this process the customer chooses from the alternatives which are
available in the market. The customer picks up from a choice of brands and makes a final decision. A
customer needs to establish criteria for evaluation and features the buyer wants or does not want.
4. Purchase Decision. In the evaluation stage, the consumer ranks brands in the choice set and forms
purchase intentions. Generally, the consumer buys the most preferred brand.
5. Post purchase behavior. The marketer’s job does not end when the customer buys a product. Following
a purchase, the customer will be satisfied or dissatisfied and will engage in post purchase actions of
significant interest to the marketer.
Organizational customer
Their purchases often involve large sums of money; complex technical, economic considerations; and
interactions among many people at all levels of the organization. Buyer and seller are often very dependent on
each other.
The Organizational Market
1. Conventions. Conventions are usually the annual meeting of an association and include general
sessions, committee meetings, and special-interest session. A trade show is often an important part of
an annual convention.
2. Association meetings. Association sponsor many types of meetings, including regional, special-
interest, educational, and board meetings.
3. Corporate meetings. A corporate meeting is a command performance for employees of a company.
The corporation’s major concern is that the meeting be productive and accomplishes the company’s
objectives.
4. Small groups. Meetings of less than 50 attendees are gaining the attention of hotels and hotel chains.
5. Incentive travel. Incentive travel, a unique subset of corporate group business, is a reward participant
perceive for achieving or exceeding a goal.
The Organizational Buying Process.
Their purchases often involve large sums of money; complex technical, economic considerations; and
interactions among many people at all levels of the organization. Buyer and seller ae often very dependent on
each other.
Participants in the Organizational Buying Process
1. Users. Users are those who use the product or service.
2. Influencers. Influencers directly influences the buying decision but do not themselves make the final
decision.
3. Deciders. Deciders select product requirements and suppliers.
4. Approvers. Approvers authorize the proposed actions of deciders or buyers.
5. Buyers. Buyers have formal authority for selecting suppliers and arranging the terms of purchase.
6. Gatekeepers. Gatekeepers have the power to prevent sellers or information from reaching members of
the buying center.
Major Influences on Organizational Buyers
1. Environmental factors. Organizations buyers are heavily influenced by the current and expected
economic environment.
2. Organizational factors. Each organization has specific objectives, policies, procedures, organizational
structures, and systems related to buying.
3. Interpersonal factors. The buying center usually includes several participants with different levels of
interest, authority, and persuasiveness.
4. Individual factors. Each participant in the buying decision process has personal motivations,
perceptions, and preferences. The participants age, income, education, professional identification,
personality, and attitudes toward risk all influence the participants in the buying process.
The Organizational Buying Decisions
1. Problem recognition. The buying process begins when someone in the company recognizes a problem
or need that can be met by acquiring a good or service.
2. General needs description. The buyer goes on to determine the requirements of the product.
3. Product specifications. Once the general requirements have been determined, the specific
requirements for the product can be developed.
4. Supplier search. The buyer now tries to identify the most appropriate suppliers.
5. Proposal solicitation. Qualified supplies ae invited to submit proposals. Skilled research, writing, and
presentations are required.
6. Supplier selection. Once the meeting planner has drawn up as short list suppliers, qualified hotels are
invited to submit proposals.
7. Order-routine specification. They buyer writes the final order, listing the technical specification. The
suppler responds by offering the buyer a formal contract.
8. Performance review. The buyer does post purchase evaluation of the product. During this phase the
buyer determines if the product meets the buyer’s specifications and if the buyer will purchase form the
company again.
The Corporate Account and Travel Manager
A nongroup form of organizational business is the individual business traveler. Most hotels offer a corporate rate,
which is intended to provide an incentive for corporations to use the hotel. Larger companies have corporate
traveler management programs run by the company or in-house branches of a travel agency. These managers
negotiate the corporate hotel contracts.
Exercises
1. Define Consumer behavior.
2. List and explain the steps in the consumer buying process.
3. Describe Personal factors that influence customer behavior.
4. Who are the organizational customers? Describe the types organizational customers and their behavior
in relation to the Hospitality business.
Activity
Choose a restaurant, tourist destination, or hotel. Go to TripAdvisor.com or Expedia.com. As a manager of the
organization you have chosen, what actions would you take based on the information you gather from the
reviews?