CHAPTER 5LESSON 1:

CONSUMER BUYING BEHAVIOR

Consumer Buying Behavior

• Behavior – refers to the reaction of the consumers to the
changes which are about to happen in the environment that
influence their buying decision
• Consumer Buying Behavior – the reaction of the consumers to
various events or forces that are currently happening in the
business community which contribute to the decision process

The environmental factors include the ff:

1. Cultural factor
2. Social factor
3. Personal factor
4. Psychological factor

Cultural Factor
• The different ethnic or racial groups here in our country have
unique cultures and traditions which results to their different
perceptions, attitudes, value system and even religion which
can affect their buying behavior.
• Subculture – a group that has beliefs and behaviors that are
different from the main groups within a society. It includes
nationalities, religions, racial groups and geographic regions.

Social Factor
• It refers to the relationship maintained or established by the
consumers with other members of the society.
• Social class – is an informal grouping of consumers based
either on the personal perception of the consumers or that of
the others. It is also measured as the combination of
occupation, income, education, wealth and other variables.

Personal Factor
• It refers to the personal characteristics of the buyer such as
his/her age, occupation, income and lifestyle.

Psychological Factor
• It refers to the perceptions, beliefs and attitudes of the
consumers
• These are highly attributed to their specific experiences with
particular products.

Buying Decision Process

• The entrepreneur must properly evaluate the buying decision
process of the customers
• The buying decision process of the customers involves the
following steps:
1. Recognition of their needs and wants
2. Search for relevant information about the product
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase analysis

Recognition of the Consumers’ Needs and Wants

• The first step in the buying decision process is the recognition
of the needs and wants of the customers
• Need – are states of felt deprivation (ex: physical needs for
food, clothing, warmth and safety)
• Wants – are the form human needs take as they are shaped by
culture and individual personality (ex: A Filipino needs food but
wants halo-halo, kare-kare and rice. A Japanese needs food but
wants maki, tonkatsu, and sushi)
• The recognition of the need basically comes from within the
person
• However, for others, the first step in the buying decision
process is the recognition of their wants.

Search for relevant information about the product

• After the recognition of the need to buy, consumers usually try
to gather enough information about the product.
• The search for relevant information usually happens when the
product is not an ordinary household commodity.
• Customers can obtain information from any of the several
sources which includes personal sources (family and friends),
commercial sources (advertising and salespeople), experiential
sources (handling, examining and using the product).

Evaluation of Alternatives
• Once the desired information are already available to the
customers, they can make the necessary evaluation of various
alternatives and make an intelligent comparison of the different
brands existing in the market.
• Consumers consider the following significant areas of the
product:
1. Price
2. Quality and durability
3. Brand, color, and design
4. Terms and conditions
5. Required payment
6. Amount of credit

Purchase Decision
• Purchase decision – the buyer’s decision about which brand to
purchase
• It is the stage when the consumer actually buys the product.
• The customer’s decision to buy a particular brand of product
may come solely from his/her own decision or it may be
attributed to the influence of outside factors like family
members, social group, friends or some future economic events.

Post-Purchase Analysis
• It is the last stage in the buying decision process when the
buyer makes a simple analysis at the back of his/her mind
whether his/her expectation has been met or not.
• The entrepreneur at this stage must gather enough
information about the level of satisfaction of the consumers as
manifested by the fast or slow sale of the product.
Lesson 2
ENTREPRENEURIAL RESEARCH ON CONSUMER BUYING
BEHAVIOR

Entrepreneurial Research
● Research – is defined as a scientific investigation. It
involves the collection, presentation, analysis and
interpretation of gathered data
● It is conducted to find out the buying behavior of the
consumers by following a procedural process.
● Entrepreneurial research gives the entrepreneurs insight
into customer motivations, purchase behaviors, and
satisfaction.

Entrepreneurial Research
● Research may be conducted to:
1. Determine the taste and preferences of the consumers
2. Know the competitors, the suppliers of the raw materials
and the processing methods that best apply to the
business
3. Determine the relationship of the different marketing
variables relative to the buying behavior of the consumers.

Entrepreneurial Research
● The research work conducted by the entrepreneur usually
follows the following procedural steps:
1. Identifying the problem
2. Deciding the type of data to be gathered
3. Evaluating how data will be collected
 4. Gathering the data
5. Analyzing the data gathered
6. Making a conclusion and recommendation
7. Reporting the result of the research work

Types of Entrepreneurial Research

1. Exploratory Research
2. Descriptive Research
3. Causal Research

Exploratory Research
● It is considered as the preliminary research work
conducted by an entrepreneur that is primarily designed to
gather baseline information to be used in solving a
problem or forming a hypothesis.
● Hypothesis – is a statement of assertion that must be
proven in a subsequent research work. The assertion must
be proven by the entrepreneur whether it is true or not.

Descriptive Research
● It is conducted by entrepreneur when the foremost
objective is to describe the present buying behavior of the
consumers in terms of environmental factors, buying
decision process and marketing mix.

Causal Research
● The entrepreneur conducts a causal research or
correlational study when the objective is to determine
whether the buying behavior of the consumer is caused by
some environmental factors.
 ● The objective of this type of research is to test hypotheses
about cause-and-effect relationships.

Research Data
● It refers to the kind of necessary information to be
gathered in answering the objective of the research work.
● It can be classified either as quantitative or qualitative
data and primary or secondary data.

Quantitative Data
● This data can be counted and mathematically computed
since they are expressed in numerical values.
● Some examples of quantitative data relative to the buying
behavior of the consumers are as follows:
1. Income of the consumers
2. Sales volume of the product
3. Age of consumers
4. Number of units produced

Qualitative Data
● Qualitative data are generally descriptive data and
therefore it cannot be counted. Mathematical
computations cannot be performed on quantitative data
since they are not numerical values.
Examples of qualitative data are the following:
1. Ethnic or tribal group of where the consumers
belong
2. Perception of the customers
3. Gender of the customers
4. Dominant culture of the market segment
Primary Data
● These are research data sourced by the entrepreneur
directly from the consumers belonging in the market
segment.
● The subject being studied by the entrepreneur is the
consumers and their buying behavior.
● The commonly used research methods of gathering
primary data are survey, experimentation and
observation.

Secondary Data
● It can be obtained more quickly and at a lower cost
compared to the primary data.
● These are data which are previously gathered by another
researcher for other purposes and now exist on other
sources.
Examples:
● Business data - CNN which provides global news and
covers the market and news-making companies in detail
● Government data – Securities and Exchange Commission
(SEC) provides financial data on the Philippines public
corporations
● Internet data – collections of information available from
online commercial sources or accessible via the Internet
(ex: Internet search engines which can be a big help in
locating relevant secondary information sources)
Research Instrument
● Research Instrument – is a tool used by the entrepreneur in
gathering or collecting data.
● The choice of research instrument to use will depend on the
type of research to be conducted and the type of data to
be gathered.
● The commonly used research instruments to collect data
are the survey questionnaire, personal interview and focus
group discussion.

Survey Questionnaire
● It is the most common research instrument being used by
the entrepreneurs in gathering the required data about the
buying behavior of the customers. It is a set of questions
presented to a respondent.
There are two forms of questions:
1. Closed-ended – questions that are answerable by “yes” or
“no”
2. Open-ended – it allows the customers to answer in their own
words

Survey Questionnaire
● The type of questions contained in the survey
questionnaire may either be:
1. A dichotomous question that has only 2 choices
2. A multiple choice question that has several or multiple
questions or alternatives with corresponding numerical weight
3. An open-ended question where the respondents are free to
provide their answers in any form
Personal Interview
● The entrepreneur conducting the study has face-to- face
interaction with the consumers who are the respondents of
the study.
● Individual interviewing involves talking with people in
their homes, offices, streets or shopping malls which can
range from a few minutes to several hours
● Interview schedule – the instrument which lists the
questions to be asked during the personal interview

Focus Group Discussion

● It is an in depth interview which is conducted by an
entrepreneur with the assistance of a moderator to gather
the views of selected customers on certain issues relative
to their buying behavior.
● This method is usually used when the research design is
qualitative in nature.
● The entrepreneur cannot use FGD (focus group discussion)
when there is a hypothesis that must be tested as true or
not.

Types of buying behavior

● The buying behavior of Filipino customers may differ
significantly from the other foreign customers due to the
different ethnic or racial groups with different cultures,
traditions, beliefs, religions and customs.
● The buying behavior of the Filipino consumers may be
classified as follows:
1. Complex
2. Simple
3. Brand-sensitive
4. Price-sensitive

Complex Buying Behavior

● The complex buying behavior of Filipino consumers is
usually manifested when they are buying expensive goods.
● The buying decision process does not usually happen in a
short period. The pros and cons of every alternative, the
probable effects and other major concerns must be
carefully examined and evaluated.

Simple Buying Behavior

● Also known as “Habitual Buying Behavior”
● It is usually exhibited when the goods are not highly
priced and the consumers are not deeply attached to
certain brands.
● This type of buying behavior is mostly manifested when
buying common household products.
● The price of the product is the primary concern of the
customers who exhibit simple buying behavior.

Brand-Sensitive Buying Behavior

● Consumers who exhibit a brand-sensitive buying behavior
are very particular with product brands. They highly value
branded products or those that have established a certain
image in the market and they are less concerned with the
price of the products.
Price-Sensitive Buying Behavior
● Consumers exhibiting a price-sensitive buying behavior
are mostly concerned with the price of the product instead
of the brand.
● The price of the product becomes the determining factor
when they buy a product. The customers equate high price
with high quality and low price with low quality, regardless
of the brand.

Lesson 3
THE MARKETING MIX

● It refers to a mode, means or tool used by the

entrepreneur to position the product in the target market
to efficiently and effectively deliver it to the consumers
● It is the set of tactical marketing tools – product, price,
and place – that the firm blends to produce the response it
wants in the target market
● It was originally known as the “4Ps of marketing” but then
the model has been altered until there became 7Ps.
THE 7Ps IN MARKETING
PRODUCT
PLACE
PRICE
PROMOTION
PEOPLE
PACKAGING
POSITIONING
PRODUCT
● It refers to the tangible goods and intangible services
offered by the business to the target customers.
● The products must satisfy the needs of the consumers
better than the other competing products
● Product mix – also known as “product assortment”. It
refers to the total number of product lines a company
offers to the customers

Classification of products
1. Industrial Products – are used as raw materials of other
manufacturing entities.
- these products usually have higher prices compared to
consumer products
- examples: wheat, cotton, livestock, fruits, vegetables, crude,
timber, iron, cement, wire

2. Consumer Products – are used and consumed by the

individual consumers

Types of consumer products:

a. Convenience products – goods and services that the
consumer buys frequently with a minimum comparison and
effort. They are usually inexpensive as well. (ex: soap,
toothpaste, detergent, magazines)

b. Shopping products – goods that are less frequently

purchased by the consumers since they spend considerable time
and effort in comparing alternative brands on durability,
quality, price and style (ex: furniture, clothing, household
appliances)

c. Specialty products – products which have unique

characteristics or brand identification for which a significant
group of buyers is willing to make a special purchase effort
(Ex: specific brands of cars, high priced entertainment system,
photographic equipment)

d. Unsought Products – consumers goods that the consumer

either does not know about or knows about but does not
normally think of buying (Ex: life insurance, home security
systems)

Place
● It refers to the place where the target customers are

● Strategic Place - the location of the business venture

where the consumers are willing to buy the product
- it is relative because the presence of many people does not
exactly assure the presence of target customers

Availability of the completing products

● The price of a certain product can be viewed from two
opposing perspectives namely, the perspective of the
entrepreneur who produces the product and the opposing
perspective of the consumers who ultimately buy the
product
● As a result, the entrepreneurs negotiate the price with
each customer by offering discounts and promos.
 ● Variables that can influence the prices of goods and
services:
- availability of the competing products
- cost of making the product
- type of product
- presence of substitute products
- stages of product in the market
- demographic profile of the target customers

● The price of the product is usually low when there is a

great amount of supply.
● In contrast, when there is a sudden decrease in the level of
supply then it will lead to an increase in the price of the
product.
● Therefore, the supply and demand for a certain product
ultimately determines the price of the product in the
market.

Cost
Cost – refers to the amount spent by the manufacturer in view
of the expected future benefits
- it also includes the direct materials, direct labor and factory
overhead
Direct Labor – refers to the wages paid to the workers who are
directly involved in manufacturing the product
Factory overhead - includes indirect materials and labor and
other expenses like the cost of light, water, fuel or machinery
maintenance
Direct materials – pertain to the materials that form part of the
finished product
Presence of substitute products
● The presence of the substitute products is a threat to the
primary product since consumers can easily switch and
buy the substitute products with lower prices especially
when the primary product is not available.

Stages of the product in the market

● Also known as the product life cycle process

The product usually undergoes the following stages:

1. Product Development Stage – begins when the company finds
and develops a new product idea. At this stage, sales are zero
and the company’s investment costs are high
2. Introductory Stage – period of slow sales growth as the
product is being introduced in the market
3. Growth Stage – it is characterized by rapid market
acceptance and increasing profit
4. Maturity Stage – period of slow sales growth because the
product has achieved acceptance by most of the potential
buyers
5. Decline Stage – it is the period when the sales fall of quickly
and the profit drops

Pricing strategies
● Price Skimming Approach – the firm charges the highest
initial price for the product that the customers are willing
to pay and then lowers it over time as competitors increase
 ● Price Penetration Approach – it involves selling the new
product at a low price during its initial offering to lure
away the customers from their competitors

● Cost-based model – it is a pricing strategy that decides the

selling price of a product is based on the cost of making
that product. Then a certain percentage of the total cost is
added as a margin and then the selling price is decided.

Demographic profile of the target consumers

● The consumers’ demographic profile highly influences the
process of setting the most appropriate prices of the goods
and services

Categories of Psychological pricing:

1. Promotional pricing – where the products are sold at a lower
price in a limited temporary period like midnight sale, Christmas
sale or anniversary sale
2. Odd or even pricing – where products are sold at prices that
end in odd number 5 like P 99.95, P199.95
3. Prestige pricing – where products are purposely sold at a
higher price in order to create a high or superior image

Promotion
● It refers to the mode of conveying the presence and
attributes of the product to the target customers

Different types of promotional tools:

1. Advertising
2. Publicity
3. Personal Selling
4. Sales promotion
5. Direct marketing

Advertising
● It refers to any paid form of nonpersonal presentation and
promotion of ideas, goods or services thru mass media

● Most common medium of promoting a product or service is

though advertising in the following forms:

1. Television or radio commercials

2. Print advertisements (ex: billboards, magazines,
newspapers)
3. Online advertising
4. Packaging ads

Publicity
● It is another way of promoting the product or service to
the target customers through media coverage
● It also involves building good relations with the company's
various publics by obtaining favourable publicity, building
up a good 'corporate image' and handling or heading off
unfavourable rumours, stories and events.

Personal selling
● It involves a salesperson who has personal and direct
contact with the prospective customers.
 ● The best salespeople are good at one-on-one contact
because they create loyalty between the product and the
customers since people trust them.
Tasks of a sales person:
1. Prospecting – finding and developing new customers
2. Communicating – communicate info about the company’s
products and services
3. Selling – they sell products by approaching customers,
presenting the products and closing sales
4. Servicing – provide services to customers such as consulting
on problems and providing technical assistance

Sales promotion
● It aims to influence the target consumers to buy the
product or avail the service now and not tomorrow.
● It is designed to be used as a short-term tactic to boost
sales. However, it is rarely suitable as a method of building
long-term customer loyalty.
Types of sales promotion:
1. Discounts
2. Coupons
3. Cash rewards
4. Gift certificates

Direct marketing
● It is a promotional method that involves selling the
products directly to the customers through the use of
cellphone text messaging, emails, websites, brochures,
catalog and online advertisements.
 ● Direct marketing is presented only to people who are
suspected to have an interest or need in your company’s
product, based on information gathered about them.
● As a result, the entrepreneur is able to save money on
distribution costs and increases the odds of reaching
people who might make a purchase.

People
● It refers to the individual employees of workers who are
directly involved in the production, marketing and sale of
the product or service.
● The entrepreneur has to make sure that he/she is hiring the
best person for the position and that person possesses the
educational qualifications which are needed for the job.

Packaging
● It refers to the process of putting the product in a package
or a container.
● The basic purpose of packaging is to protect the product
from spillage, damage or spoilage.
● The label printed on the packaging material must be
attractive, readable and complete with the necessary
product information.

Positioning
● It is the last stage in the market identification process
which refers to the place occupied by the product in the
minds of the consumers.
● It gives the product a clear, distinct and desirable place in
the minds of the consumers
 ● The entrepreneurs plan positions that distinguishes their
products from competing brands and gives them the
greatest strategic advantage in their target markets

Integrated marketing mix

● It involves the combination of the different Ps to position
the product in the market
● The different elements in the marketing mix blend
harmoniously in order to influence the demands of the
target customers.
● Since the 7Ps are considered as seller- oriented they must
be converted to become consumer-oriented.
1. Customer satisfaction for product
2. Customer convenience for place
3. Customer cost lowered
4. Customer information for promotion
5. Customer quality assurance for people
6. Customer safety for packaging
7. Customer decision for positioning

Lesson 4
THE CONCEPT OF NEEDS, WANTS, AND BRANDING

NEEDS
● Refer to the things that a person must have in order to
survive
Ex: Physiological needs such as food, clothing, shelter, water
WANTS
● Refer to the things that a person must have in order to be
happy, comfortable and satisfied

● Wants are shaped by the society and are things that can
satisfy the desire of the person

MASLOW’S HIERARCHY OF NEEDS

● It is a theory in psychology proposed by Abraham Maslow
which classifies the different needs of human beings into
five levels which are the following:
1. Physiological Needs – known as the basic needs of human
beings (ex: food, water, shelter, clothing, sleep)
2. Safety Needs – these includes physical safety, economic
safety, and financial safety
3. Social Needs – need for friends, acceptance, love or
belonging
4. Self-Esteem – need for respect, recognition and honor by the
local community or by the Filipino people in general
5. Self-Actualization - realizing one’s personal potential, and
self-fulfillment
BRANDING

● Brand – refers to the name, design, color, symbol, quality,

features of a combination of these elements that make the
product separate and distinct from similar products of the
competitors
● Brand name – the part of the brand that is verbally
mentioned when referring to a specific product
● Selecting the right name is a crucial part of the marketing
process. The brand name should be carefully chosen. A
good name can add greatly to a product's success.
● Product line - is a group of related products under a single
brand sold by the same company

BENEFITS OF BRANDING

1. Brands help buyers identify specific products that they

would like to purchase.
2. Sellers benefit from branding because each company’s
brands identify its products which makes repeat purchasing
easier for consumers.
3. Branding also facilitates promotional effort because it
indirectly promotes all other products that are similarly
branded.
4. Branding can help companies earn higher profit margins.
TRADEMARK

• It typically protects brand names and logos used on goods

and services

• Once chosen, the brand name must be registered with the

appropriate Trade Marks Register, giving owners intellectual
property rights and preventing competitors from using the
same name.

A Registered Trademark

• Gives its registered owner certain exclusive rights and is

required for safeguarding the commercial goodwill and
originality of goods and services.

• According to the law, actions will be taken against the

infringers for a registered trademark while it does not happen
for an unregistered one.

• It lets the registered owner to approach the judiciary for

infringement and can claim damages from the person who is
using his trademark without his consent or approval.

Unregistered Trademark

• Doesn’t safeguard against any infringement as it is not

registered in the Trademarks Register Office
• Doesn’t have the right to stop a third party from using the
same mark/logo/symbol

• Though no action can be taken for infringement of an

unregistered trademark a third party can be sued for passing it
off under the law

BRANDING STRATEGIES
● Branding strategy – it starts with the formulation of a
brand name for the first single product that the business
intends to make.

Types of Branding Strategies:

1. Umbrella Brand Approach
2. House Brand Approach

UMBRELLA BRAND APPROACH

● In this type of branding strategy, all products of the

business carry the same brand name.

● The basic idea behind this strategy is to enhance

marketability of products and it follows the psychological
concept that any product that carries the same brand
name is produced using the same high standards of
quality. So a brand may have 10 product lines, but the trust
on that brand, leverages the attributes of all the 10 product
lines.
Examples: Apple, Adidas, Honda, Toyota
HOUSE BRAND APPROACH
● Every product of the same business has a separate brand
name that distinguishes it from the rest of the company’s
products.

● Separate identities for each brand: brands have their own

names, personalities, audiences, and sometimes they
compete with each other. They are designed to stand apart
and be independent from the master brand or the other
house brands. It is common for the consumers to not be
aware of the parent brand.
Ex: P&G, Unilever

BRANDING EXTENSION STRATEGY

● Brand equity – the level or degree of the consumers’

perceptions or reactions to a brand

● It can also refer to the value of having a well-known brand

name based on the idea that the owner of a well-known
brand name can generate more revenue simply from brand
recognition.

● Brand extension strategy - is a marketing strategy in which

an organization that markets a product or service with a
well-developed image uses the same brand name but in a
different business category
2 TYPES OF BRAND EXTENSION STRATEGY:
1. Line Extension Approach
2. Product Extension Approach

LINE EXTENSION APPROACH

● It refers to the expansion of an existing product line

● The existing product has been modified or altered resulting

in a new product or more products without eliminating the
original product. The new products still belong in the same
category just like the original product.

● Ex: San Miguel Brewery, a manufacturing company of

alcoholic beverages, can introduce other products such as
San Mig light, San Miguel Flavored Beer, and Red Horse
without eliminating their original product which is the San
Miguel Pale Pilsen.

● Line extension adds variety to its existing product for the

sake of reaching a more diverse customer base and
enticing existing customers with new options.

PRODUCT EXTENSION APPROACH

● It is also known as “brand extension” Product extension
refers to the expansion of the brand itself into new
territories or markets.

● The new or added product appears to be totally different

from the old or existing product line.
● For instance, Samsung offers a variety of products for
their customers such as smartphones, washing machines,
televisions, tablets, laptops and several others.

● The brand, or company, is an established name, and so

the name alone can serve to drive customers to try new
products completely unrelated to the older product lines.