PRINCIPLES

OF
MARKETING
Objective/s:

Differentiate the buying

behavior and decision making
of individual/household
customer versus the business
(organizational) customer.
 Buying
Behavior and
Decision
Making
 Consumer Buying
Behavior and Decision
Making
 Consumer Markets
include individuals and/or
households that purchase
products and services for
personal consumption.
 Consumers normally make
purchase in smaller quantities,
due to their tendency to consume
products gradually over a period
of time.
The purchase are at times
impulsive or spontaneous.
The way that we perceive, react, or
are affected by products and
services is a function of a host of
factors. The following are factors
that tend to have an effect on
consumer behavior:
Factors that Affect Consumer Behavior:

1. Culture
2. Social Factors
3. Personal Factors
4. Psychological Factors
 Factors that Affect Consumer Behavior:

1. Culture (how a learned world view can

influence buyer behavior.)

➢This refers to the general or overall

culture of a group of people.
▪ Culture and sub-culture
▪ Social Class
 Cultural differences lead to
distinct market segments
that may even manifest
distinct tastes and
preferences for products and
services.
 Factors that Affect Consumer Behavior:
2. Social (how people around us can influence buyer
behavior.)
➢ This is all about the norms of behavior among
even smaller groups, namely the social groups
where a consumer belongs to.
➢People tend to want to behave in the same
manner that their peers do, so that there is an
established code of conformity among them.
▪ Reference groups
▪ Family
▪ Roles and Status
The market may also look up to
certain aspirational groups
whose behaviors they seek to
emulate and may even look
down on certain groups they
want to dissociate from.
All of these affect the market’s
behavior in terms of deciding
on what they should wear,
what they should eat, who to
aspire to be like, where to go,
and more.
 Factors that Affect Consumer Behavior:

3. Personal (how personal circumstance

can influence buyer behavior)

➢ aside from external social factors, the

demographics of the individual also
affect the manner by which products
and services are viewed and treated.
 Factors that Affect Consumer Behavior:
3. Personal (how personal circumstance
can influence buyer behavior)
▪ Age and life cycle
▪ Occupation
▪ Economic circumstances
▪ Lifestyle
▪ Personality
• The taste and preferences of younger
people will be different from that of more
senior individuals.
• Men and women tend to look for different
things on many types of products.
• Disposable income defines what people
can and cannot buy, while physical
location limits access to services.
 Factors that Affect Consumer Behavior:
4. Psychological (how self-concept can
influence buyer behavior)
➢ this is how an individual behaves and
behavior is a very intimate thing it is the
result of how we are raised, who we
interact with, what our histories are, and
much more, this includes our personal
preferences, opinions, and overall
behavior.
 Factors that Affect Consumer Behavior:
4. Psychological (how self-concept can
influence buyer behavior)

▪ Motivation
▪ Perception
▪ Learning
▪ Beliefs and Attitudes
❑While the above factors are inter-related
with different weights per person,
consumers are typically influenced on the
cultural and religious levels first, then by
social factors or people around them.
Their personal factors also come to play.
Finally, psychological factors affect his
motivations and perceptions of the
different information that he is exposed to,
which further help create awareness and
shapes his viewpoints.
❑It is important for marketers to
understand that contrary to popular
belief, when consumers make a
buying choice, they do not based on
marketing mix alone (4Ps) but on
their own characteristics; cultural,
social, personal, psychological
factors.
 5 Roles individual may portray
in a consumer buying decision (Buying Roles):

1. Initiator – suggest to buy

2. Influencer – convince to purchase
3. Decider – makes final decision
4. Buyer – person who makes the purchase
5. User – person who uses the product/service
Classification of buying behavior based on:
1. The consumer’s perception of
the product category
2. The consumer’s attitudes toward
the product category.
 Types of Buying Behavior:

❑ Complex buying behavior

❑ Dissonance reducing behavior
❑ Variety-seeking behavior
❑ Habitual buying behavior
 Types of Buying Behavior:

❑ Complex buying behavior – arises for

important purchases where there are so
many different features and attributes
with each brand having different
manifestations of each feature. A
consumer undertakes a lot of searching
and analyzing before any purchase
happens. (Ex. Houses, cars, and durable goods.)
 Types of Buying Behavior:
❑ Dissonance reducing behavior – occurs
when a consumer wants to keep life simple,
and yet the risks faced with the buying
decision for an important purchase are
perceived to be high.
❑The consumer may resort to decisions that
simplify life such as buying the brand that
most people chose, relying on the decisions
of a trusted friend, or relying on the word of
the salesperson. (Ex. Most of appliances and
electronics)
 Types of Buying Behavior:
❑ Variety seeking behavior – occurs
when the product involves minimal risk
but there are so many choices, each with
its own features and attributes. The
consumer may opt to try each product at
least once, leading to the trying of a wide
variety of the products.
(Ex. Snack foods in groceries, diff. restaurants)
 Types of Buying Behavior:
❑ Habitual buying behavior – happens
when consumers feel that learning
about the different competing products
is not worth it, so they would rather
select the product that they are most
comfortable with.
(Ex. FMCG – personal care products, instant coffee,
etc.)
 Types of Buying Behavior:

High Involvement Low Involvement

Significant Complex
Difference
Buying Variety-seeking
Between Behavior
Brands Behavior

Few Dissonance-
Differences
Habitual Buying
reducing Buying
Between Behavior
Behavior
Brands
5-Step Consumer’s Buying Decision Process

1. Problem/need recognition – a
purchase cannot take place without
the recognition of the need. The need
may have been triggered by internal
stimuli or external stimuli.
(Why do I need to make this purchase?)
5-Step Consumer’s Buying Decision Process
2. Information search – this is the buyer’s
effort to search internal and external
business environments, in order to identify
and evaluate information sources related to
the central buying decision.

(Where do I get my information relevant to

my need?)
5-Step Consumer’s Buying Decision Process
3. Evaluation of alternatives – individuals
will evaluate different products or brands at
this stage on the basis of alternative product
attributes – those which have the ability to
deliver the benefits the customer is seeking.
(What are available attributes and how do I
prioritize these attributes, including brand
image?)
5-Step Consumer’s Buying Decision Process
4. Purchase decision – the final
purchase decision may be disrupted by
two factors: negative feedback from
other customers and the level of
motivation to accept the feedback (Philip
Kotler, 2009).

(What will I buy? from whom? when and how

much?)
 5-Step Consumer’s Buying Decision Process
5. Post-purchase behavior – customers
will compare products with their
previous expectations and will be either
satisfied or dissatisfied. If your customer
is satisfied, this will result in brand
loyalty.
(How do I feel after using the product or service?)
Business (organizational)
Buying Behavior and
Decision Making
 Business Markets are
organizations that buy goods
and services for use in the
production of other products
and services.
 Typically, business markets
facilitate sales from one
business to another in cases
where one business plans to
reuse or resell another
company’s products or services.
5 Buyer Influences in Business Markets

1. Environmental Influences
2. Organizational Influences
3. Situational Influences
4. Interpersonal Influences
5. Individual Influences
 5 Buyer Influences in Business Markets

1.Environmental influences
- Supply conditions
- Competitive developments
- Social responsibility
 5 Buyer Influences in Business Markets
2. Organizational influences
- Objectives
- Policies
- Procedures
- Organizational structures
- Skills
- System
 5 Buyer Influences in Business Markets

3. Situational influences
- Time
- Financial standing
- Availability
- Exclusivity
- Special offers
5 Buyer Influences in Business Markets

4. Interpersonal influences
- Interests
- Authority
- Status
- Empathy
- Persuasiveness
 5 Buyer Influences in Business Markets

5. Individual influences
- Age - Personality
- Income - Risk tolerance
- Education - Culture and
- Job position customs
 Roles in the Buying Process
(Organizational Markets)
1. Initiators – identify problems.
2. Influencers – affect buying decisions.
3. Buyers – have formal authority to select suppliers
and arrange terms.
4. Deciders – have formal or informal power to select
or approve final suppliers.
5. Gatekeepers – control the flow of information to
others.
 Business Buying Decision Process

Step 1: Problem Recognition

The client organization
acknowledges the need for a
particular product or service.
 Business Buying Decision Process

Step 2: General Need Descriptions

This is the start of a formal buying
process where forms are filled out
that justify the need for the
purchase.
 Business Buying Decision Process

Step 3: Product Specification

Technical personnel are engaged
in this process in order to
provide the specific technical
details for the needed product or
service.
 Business Buying Decision Process

Step 4: Supplier Search and/or

Proposal Solicitation
Possible suppliers are sought out
or ads are placed in order to
invite potential bidders.
 Business Buying Decision Process

Step 5: Supplier Selection

A formal selection process is
consummated based on pre-
established guidelines, leading to
the determination of the
supplying enterprise.
 Business Buying Decision Process

Step 6: Order-Routine Specification

The purchase order is made out. If
this will be a recurring purchase,
then it is possible that this will
become a long-term and therefore
routine transaction.
 Business Buying Decision Process

Step 7: Performance Review

Both the product and the relationship
with the supplier are evaluated in
order to establish if there may be a
need to look for alternative suppliers
on the next round.
Consumer Market
vs
Business Market
 Similarities of
Consumer and Business Market
They both need to:
▪ Identify their target market
▪ Fully understand their customers
▪ Demonstrate value-creation from the
perspective of their target market
▪ Be trustworthy brands and sellers
They both need to:
▪ Create a pricing scheme affordable to their
target market
▪ Identify their channel service attribute
▪ Communicate well with their target market
▪ Have customer bonding with their customers
▪ Outperform competition
▪ Be profitable
 Difference of Consumer and Business Market
Consumer Market Business Market

Relative number of Larger Fewer

buyers
Relative volume of Smaller Larger
transactions
Demand Direct Derived and fluctuating
Consumer decision More emotional More professional and
and discretionary directed on identified
problems
Buying influences Fewer Several
Sales call interaction Few Multiple
 Consumer Market Business Market
Supplier policy Discretionary Minimum of 3 competitive bids
Supplier accreditation Not required Required
Buying center - Initiator - Initiator
- Influencer - User
- Decider - Influencer
- Buyer - Decider
- user - Approver
- Buyer
- Gatekeeper
Communication Mass media and Sales calls
channel social media
Communication goals Awareness creation Lead generation to closing
Purchasing recipient Mostly for On behalf of an organization
individuals
 Consumer Market Business Market
Sales cycle Simpler and faster Complex and lengthy
Buyer Average Expert
Number of decision Few Multiple
makers
Buying decision - Needs recognition - Problem recognition
process - Information research - General need
- Evaluation of descriptions
alternatives - Product specifications
- Purchase - Supplier search
- Post-purchase - Proposal solicitations
- Purchase decisions
(Supplier selection)
- Order routine
- Supplier performance
review
 Based on your personal experience visiting a
large supermarket and observed shoppers in the
personal care or toiletries section buying either
toothpaste, soap, or shampoo.
What have you observed of their buying
behavior and decision-making process,
considering the population segments such as:
men, women, teenage, middle-aged, elderly,
wealthy, middle-class, etc.
- End of lesson -

Any questions,
clarifications, etc...
 “You cannot please everybody.
But by gathering together
sufficient people with a
particular need, you can at least
try to please everyone in this
group.”