Chapter 6 Consumer Decision Making

6-1 The Importance of Understanding Consumer Decision Making

- without an understanding of consumer decision making we cannot come up with the marketing
mix
- Consumer preferences are continually changing-
o Study how consumers make purchase decisions
 Decision they have to make in order to make a purchase
o how they use the purchase
 example – computer – helps with development and coming up with an idea
o how they dispose
 eco-friendly products – societal marketing view – “doing the right view”
o what factors influence the purchase, use, and disposing

6-2 The Consumer Decision-Making Process

Cultural, Social, Individual, and Psychological Factors affect all steps

- Need Recognition
o Example – need a cellphone – search prices of different phones etc.
- Information Search
- Evaluation of Alternatives
- Purchase
- Post purchase Behaviour
o Happy – so the consumer posts on IG with their new iPhone 11 Pro

Normally, whatever we buy we follow these steps

- Why tho? Because some have a lot of influence on us, so we tend to skip some stages
- Influenced by many factors – social, individual and psychological

6-2a Need Recognition

- Internal stimulus
o Example – did not have breakfast to get McMuffin
- External stimulus
o Example – saw deal and bought 2 for $5 Big Mac
- Hunger and thirst
- New product – old phone – low battery
- Observe trends
- Marketers know needs can be manufactured
- Create needs by coming up with new ideas

6-2b Information Search

- Internal information search

 o Example – I used Samsung before so I know its good
- External information search
o Via newspaper, blog, etc.
- 2 types: non marketing controlled, and marketing controlled
o Non marketing controlled – ex. - personal experience, sources, public sources
o Marketing controlled – ex. - mass media, salespeople etc.
- Non marketing controlled is preferred
- Consumer to consumer external information
o Example – Amazon online reviews

Factors affecting information search

- Evoked set – consists of alternatives

- Risky product – spending $5K to buy a new car
- Prior experience/previous knowledge
- Interest
o Example – the consumer will do intensive research for a product they are interested in
contrary to a product they are not interested in
- Confident in decision making ability

6-2c Evaluation of Alternatives and Purchase

- Alternatives and how we evaluate

o Develop criteria:
 Pick a product attribute – example – best selfie camera, automatic car with
navigation
o Set a cut off
 Example – don’t have enough money won’t buy a costly car – old car – wont buy
a car older than 5 years
o Rank attributes
 Example – sued car – want great condition then price preference 10k to 12k
o Marketers perspective – try to see which product consumer values most
 Brand name
 Example – Tesla – self driving, electric – 500 km – with full battery – incentive –
fuel efficiency

6-2d Post purchase behaviour

- Decision confirmation
o Was it a good decision? Did I spend too much?
- Cognitive dissonance
o When a consumer is not happy with products, we return it
o 90% of electronic products returned are perfectly working but consumers return it
because they are simply not happy with it
o Example – return a laptop in 21-31 days

6-3 Types of Consumer Buying Decisions

 - 3 types of purchases
o Routine – when not involved – example – buying toothpaste
o Limited – moderate – example – buying a laptop for research
o Extensive – costly – example – buying a car
- Routine
o Low involvement
o Short time
o Low cost
o Internal information search
o one alternative
- Limited
o Low to moderate
o Short to moderate time
o Low to moderate cost
o Internal information search
o Few alternatives
- Extensive
o High involvement
o Long time
o High cost
o Internal and external information search
o Many alternatives

6-3a Factors determining the level of consumer involvement

- Previous experience
- Interest
- Perceived risk of negative consequence
- Social visibility – example – all colleagues have Tesla – so I would not purchase a truck as I would
seem to be non eco-friendly
- Situation

6-3b Marketing Implications of Involvement

- Low Involvement Products

o Example – Tide – colorful – customers may not be aware of
- High Involvement Products
o Marketers help with information and knowledge
o Reduce cognitive dissonance
o Companies go by using expertise

6-3c Factors affecting consumer buying decisions

Cultural Influences on Consumer Buying Decisions

6-4a Culture and Values:

- Culture – set of norms, values, attitudes and symbols

- Language spoken, clothing, food, religion is all part of culture

6-4b Understanding cultural differences:

- Understand multicultural society – example – egg McMuffin without meat

6-4c Subculture:

- Group of people who share elements of overall culture and have unique elements
- Example – Muslim – only eat halal

6-4d Social Class:

- Typically measured as a combo of occupation, income, education, wealth and other variables
- Very important to segment market and targeting

6-5 Social Influences on Consumer Buying Behaviour

- Opinion leaders
o Reference groups who influence others
o Often the first to try a new product
o Typically self-indulgent
- Family
o Influence values, attitudes and self concept, hence buying behaviour
o Different members play different roles
- Rely on reference groups – direct and indirect – example family and not part of the family
- Nonaspirational groups we do not want to be part of
- Family – values – big influence on behaviours and actions

6-6 Individual Influences on Consumer Buying Behavior

- Gender
- Age
- Family Life Cycle
- Personality
- Self – Concept
- Lifestyle

6-7 Psychological Influences

- Perception
o Selective exposure – example red Coca Cola Cans
o Selective distortion – love iPhones but recent survey shows Google Pixel 3 is better –
you listen to that but soon you will begin to say that no in fact iPhone is still better for
the following reason etc. – you are distorting it
o Selective Retention – we retain what we want to retain
- Motivation
 o Maslow’s Hierarchy of Motivation
- Learning
o Experiential and Conceptual
- Beliefs and Attitudes
o Beliefs – organized pattern of knowledge than an individual holds as true about their
world
o Attitudes – learned tendency to respond consistently toward a given object
o Changing consumers attitudes about a product
 Changing beliefs about the brands attributes
 Changing the relative importance of these beliefs
 Adding new beliefs
- Effective marketers carefully study their target markets all the time to see changes in their
buying decisions
- Adjustments are made to the marketing mix to meet the changing consumer needs and help to
move the consumer through the buying process

Chapter 7 Business Marketing

Business-to-business marketing (B2B)

- A process of matching capabilities between two business entities to create value for both. It is
marketing done differently.
- Active connection between businesses to ensure needs are met
(based on trust and mutual respect and achievement of goals through cooperation)
- Relationships are critical because there are so few

Business versus Consumer Marketing

- Consumer Marketing - active seller and passive buyer

- Business Marketing – active seller and active buyer

Network and Relationships Approach

Relationships in Business

- These relations are more complex and have two aspects- trust and commitment
- Shared vision and goal congruence are important to develop trust

Interaction in Business Marketing

- From interruption to interaction: short term to long term vision (auto leasing is an example of
this approach)

CMA definition of Business Marketing—A network of buyers, sellers, and other third parties.

• Sales approach—generate leads and new business through persuasion

• Marketing Management approach—develop a product and market it—passive consumer

 • Network approach—research the factors and forces around a firm—understand the
environment. Talks about building relationships through interaction.

Business Network

Evolution of a Business Network

Fundamental Aspects of Business Marketing

Highlight the importance of relationship between buyer and seller in a business interaction

- Demand
- Types of buyers
- Buying situations
- Products and services
Demand: Derived demand, inelastic demand, joint demand and fluctuating demand

Number of customers: Far fewer in number, but each customer may be crucial for the company

Location of Buyers: Geographically concentrated

Types of Negotiations: Negotiation is common

Use of Reciprocity: Often encouraged

Use of Leasing: Common to lease capital equipment

Types of Business Products:

- Major equipment
- Accessory equipment
- Raw materials
- Component parts
- Supplies

Services—not necessarily part of the final product but do have an impact on the customer’s willingness
to buy and maintain a relationship

Classifying Business Customers

- Producers
o Profit oriented individuals and organizations that use purchased product and services
o In other products or in their operations
- Resellers
o Retailers and wholesalers
o Buy to resell
- Governments
o Largest single segment for goods and services
o Contracts are put out for bid
o Allows for all suppliers a fair chance
o Federal government
o Municipal, academic, social, and hospitals - MASH
- Institutions
o Seek to achieve goals other than standard business goals
o Other than MASH – includes places of worship, labour unions, civic clubs foundations,
fraternal organizations

Business Buying Behaviour - Buying Centres:

- All the people in the organization who are involved in the purchase decision
o Membership and influence vary by company. Number of people varies with complexity
and importance of the purchase
o Composition can change throughout the purchase process and changes from purchase
to purchase
 - Nature of buying and influence, roles in the buying center are important issues for marketing
managers

Buying Situations

- Modified
- New task
- Straight rebuy

Evaluation Criteria for Business Buyers

- Quality – service – price

Business Marketing Online

Presents a great opportunity—infancy

- E-commerce—growth as security enhanced

- Some numbers

o Almost all businesses report using the Internet in 2016

o Only 60% have a website though

o Only 15% have used an online presence for marketing purposes

- Why so slow to adopt?

o Cost of creating an online presence

o Security

o Competitive intelligence

Trends in B2B Online Marketing

Online usage will grow as a result of a number of new technologies and approaches:

o The growth of mobile

o Importance of content marketing

 Blogs, articles, e-newsletters to build profile

o Social media growth

 Being used by consumers as a method of inquiry—more information or to voice

a concern

 Critical to ensure that a social media policy exist to ensure social media is
leveraged properly
 LinkedIn is still king