2.3 Analyzing Buying Behaviour on the B2C Market in:

Svend Hollensen, Marc Oliver Opresnik

Marketing, page 88 - 93

A Relationship Perspective

1. Edition 2010, ISBN print: 978-3-8006-3722-5, ISBN online: 978-3-8006-4870-2,

Bibliographic information
2. Situational Analysis in the Marketing Planning Process74 Alliances can come in all shapes and sizes. They can vary considerably in intensity and duration, may be ‘one-shot projects’, limited but continuous cooperation or take parties so close that the next step is to consider merger (Gummesson, 1999). Legislators Companies have long recognized the importance of maintaining good relationships with legislators. There is, however, a significant difference between the types of relationship permitted with legislators and those between commercial companies. Whereas commercial enterprises are free to establish whatever depth of relationship the parties see fit, relationships with legislators at anything less than arm’s length are perceived as potentially corrupt practice in most developed economies. ‘Lobbying’ is the overriding term often used to describe the methodologies applied to influence government. Although the term implies influence through argument, the general meaning is ‘to influence or solicit’. Lobbying may thus take the form of information transmission (ensuring legislators have the information to make a decision), influence (ensuring that the company’s or industry’s position is clear), general ‘public relations’ activities (e.g. social events) and political party funding (Egan, 2008). Pressure Groups There are a growing number of pressure groups whose actions can influence and affect the commercial viability of a company. They can have a substantial influence with consumers and legislators considerably out of proportion to their size, as companies such as Shell and McDonald’s can testify. Frequently, commercial organisations find themselves in opposition to such pressure groups. Whereas full agreement may not always be possible, maintaining a dialogue with such groups is in the organisation’s best interest (Egan, 2008). 2.3 Analyzing Buying Behaviour on the B2C Market Customer buying behaviour refers to the buying behaviour of final consumers – individuals and households who buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market (Kotler and Armstrong, 2009). Organisational buying, on the other hand, focuses on the purchase of products and services for use in an organisation’s activities. Sometimes, it is difficult to classify a product as either a consumer or an organisational good. Cars, for example sell to customers for personal consumption and organisations for use in carrying out their activities e.g. to provide transport for a sales executive. For both types of buyer, an understanding of customers can be gained by answering the following questions (Jobber, 2010): Who• is important in the buying decision How• do they buy? What• are their choice criteria? Where• do they buy? When• do they buy? Buyer behaviour as it relates to customers will now be examined based upon the first three questions as these are often the most intractable aspects of buyer behaviour. Kapitel_2.indd 74 03.08.2010 12:46:34 Uhr 2.3 Analyzing Buying Behaviour on the B2C Market 75 Who is Important in the Buying Decision? Consumers around the world vary vastly in age, income, education level, and tastes. They can also buy an enormous variety of goods and services. How these diverse customers connect with each other and with other elements of their surroundings impacts their choices among products, services and companies (Kotler and Armstrong, 2009). The marketing implications of understanding who buys mainly lie within the areas of marketing communications and segmentation. An identification of the roles played within the buying centre is a prerequisite for targeting effective communications. The person, who actually uses or consumes the product may not be the most influential member of the buying centre, nor the decision-maker. Even when the user does play the predominant role, communication with other members of the buying centre can be useful when their knowledge may function as persuasive forces during the decisionmaking process. The second implication is that the changing roles and influences within the family buying centre are providing new opportunities to segment hitherto stable markets. How do they Buy? The central question for marketers is: How do customers respond to various marketing efforts of the company? The company actively has a strong role to play in designing and providing appropriate stimulation to the purchase decisions. The customer buying process is a dynamic interaction between the consumer and the environment. The consumer actively participates in the process by searching for information on alternatives available, by providing evaluations of products and services, and by expressions of risk. In this process the company also plays an active role by manipulating the variables under its control. The company modifies the marketing mix to accommodate the demands expressed by consumers. The more successful it is in matching its marketing mix with expressed and latent demands in the market, the greater is the possibility that consumers will patronize the company’s products now and in the future. Consumer behaviour is determined by a host of variables studied in different disciplines. Consumer behaviour may be described with the help of the stimulus-organisms-response model (S-O-R model) as a relationship between a stimulus of some sort, such as a new product, the way information about the innovation is processed by the consumer, and the response the consumer makes having evaluated the alternatives (see Figure 2.8). The stimulus is driven by the range of elements in the marketing mix, which the company can manipulate to achieve its corporate objectives. These stimuli derive from the product or service itself, or from the marketing programme developed by the company to support its products and services. A number of symbolic stimuli derive from the use of media such as television. Stimuli also include many of the conditioning variables like cultural and social influences on consumer behaviour and the role of reference groups. Process (or organisms) refers to the sequence of stages used in the internal process of these influences by the customer. This sequence highlights the cause-and-effect relationships involved in making decisions. The process include the perceptual, physiological and inner feelings and dispositions of consumers towards the product or service being evaluated. Kapitel_2.indd 75 03.08.2010 12:46:34 Uhr 2. Situational Analysis in the Marketing Planning Process76 The third component refers to the consumer’s response in terms of changes in behaviour, awareness and attention, brand comprehension, attitudes, intentions and actual purchase. This response may indicate a change in the consumer’s psychological reaction to the product or service. As a result of some change in a stimulus, the consumer may be better disposed to the product, have formed a better attitude towards it, or believe it can solve a particular consumption-related problem. Alternatively, the response may be in the form of an actual change in purchasing activity. The consumer may switch from one brand to another or from one product category to another. Consumer responses may also take the form of a change in consumption practices, whereby the pattern of consumer behaviour is changed. Supermarkets frequently offer incentives to get people to shop during slack periods of the week, which involves a change in shopping practice. Generally speaking, a great deal of interest is focused on responses that involve buying or the disposition to buy. Manufacturers spend considerable amounts of money in developing and promoting their products, creating brands and otherwise designing marketing effort to influence consumer behaviour in a particular way. At the same time, consumers may be more or less disposed to these efforts. Through the influence of external stimuli and internal processing mechanisms, a convergence may occur between consumer needs and wants, and the products and services provided. On other occasions, no such convergence occurs. A key determinant of the extent to which consumers evaluate a brand is their level of involvement. Different buyers may engage in different types of decision-making processes depending on how highly involved they are with the product. High-involvement products for one buyer may be a low-involvement products for another. Stimulus ? Culture ? Social influence ? Reference group ? Marketing Mix Process/ Organism ? Psychological factors ? Physiological factors ? Perceptions and feelings Response ? Attitudes and beliefs ? Buying behaviour ? Buying practices Figure 2.8: The S-O-R model Kapitel_2.indd 76 03.08.2010 12:46:34 Uhr 2.3 Analyzing Buying Behaviour on the B2C Market 77 Consumer involvement is frequently measured by the degree of importance the product has to the buyer. Laurent and Kapferer (1985) suggest a number of factors which influence the degree to which consumers become involved in a particular purchase. The most important factors are: Perceived importance of the product• Perceived risk associated with its use.• The level of involvement with any product depends on its perceived importance to the consumer’s self-image. High-involvement products tend to be tied to self-image, whereas low-involvement products are not. A middle-aged consumer who feels (and wants to look) youthful may invest a great deal of time in her decision to buy a sport-utility vehicle instead of a station wagon. When purchasing an ordinary light bulb, however, she buys almost without thinking, because the purchase has nothing to do with self-image. The more visible, risky, or costly the product, the higher the level of involvement. This distinction between high- and low-involvement products and situations implies different evaluation processes. For high-involvement purchases the Fishbein and Ajzen theory of reasoned action can be used to explain purchase behaviour, while in low-involvement situations work by Ehrenberg and Goodhart can clarify the buying pro cess. The model of Fishbein and Ajzen suggests that an attitude towards a brand is based upon a set of beliefs about the brand’s attributes. These are the perceived consequences resulting from purchasing the brand. Those attributes which are rated highly will make up the customer’s choice criteria and have a substantial influence in the formation of an attitude. An attitude is the degree to which a customer likes or dislikes the brand. The link between beliefs and attitudes is shown in figure 2.9. However, external influences are also important as individuals will evaluate the extent to which important stakeholders believe that they should or should not buy the product. These beliefs may be in conflict with their personal beliefs. People, for example, may personally believe that buying a sports car may have positive consequences (e.g. being more attractive to other people) but refrain from buying the product if they believe that important stakeholders (e.g. parents) would disapprove of the purchase. This collection of so-called normative beliefs forms an overall evaluation of the degree to which these outside influences approve or disapprove of the purchase (subjective norms). Within this theory of reasoned action customers are highly involved in the purchase to the extent that they evaluate the consequences of the purchase and how others will perceive it. Only after these considerations have taken place does the purchase intention and the ultimate purchase result (Ajzen and Fishbein, 1980; Jobber, 2010). The Ehrenberg and Goodhart model suggests that in low-involvement situations the amount of information processing implicit in the earlier model may not be worthwhile. A typical low-involvement situation is the repeat-purchase of fast-moving consumer goods. According to this model, awareness precedes trial, which, if satisfactory, leads to repeat purchasing behaviour. The behaviour becomes habitual with little conscious thought and consideration preceding the behaviour (Ehrenberg and Goodhart, 1980). Distinguishing between high- and low-involvement situations is paramount because the variations in how customers evaluate products and brands lead to different marketing implications. Within high-involvement situations marketing managers need to provide a great deal of information about the satisfactory consequences of buying. Messages of high information content are important to enhance brand knowledge ; because the consumer is actively seeking information, high levels of repetition are not necessary (Rothschild, 1978). Kapitel_2.indd 77 03.08.2010 12:46:35 Uhr 2. Situational Analysis in the Marketing Planning Process78 In low-involvement situations it is vital to gain top-of-mind awareness through advertisement and providing positive reinforcement (e.g. through sales promotion) to achieve trial. As the customer is not actively seeking information advertising messages should be short with a small number of key aspects but with high repetition to enhance learning and stimulate purchase and repeat purchase. What are Their Choice Criteria? Choice criteria are the different attributes and benefits a customer uses when evaluating products and services. Different members of the buying centre may have different choice criteria. Moreover, choice criteria can change over time due to changes in income through the family life cycle. Types of choice criteria include technical, economic, social and personal (Jobber, 2010): Source: Adapted from Jobber, 2010 Normative beliefs Personal beliefs Purchase intentions Purchase Attitudes Subjective norms High involvement: the Fishbein and Ajzen model of reasoned action TrialAwareness RepeatPurchase Low involvement: the Ehrenberg and Goodhart repeat purchase model Figure 2.9: Evaluation and purchase models Example 2 Rolex positions its products to be a symbol of achievement and its rewards Kapitel_2.indd 78 03.08.2010 12:46:35 Uhr 2.4 Analyzing Buying Behaviour on the B2B Market 79 Technical criteria• are related to the performance of the product or service, and include reliability, durability, taste, and convenience. Economic criteria • concern the cost aspects of purchase and include value for money, price, and residual values. Social criteria • refer to the impact that the purchase makes on the customer’s perceived relationship with other people, and the influence of social norms on the person. Personal criteria • concern how the product or service relates to the individual psychologically and includes self-image and risk reduction. 2.4 Analyzing Buying Behaviour on the B2B Market The business buying process can be described as the decision process by which business buyers determine which products and services their organisations need to purchase, and then find, evaluate, and choose among alternative suppliers and products (Kotler and Armstrong, 2009). Consumer behaviour relates to the buying behaviour of individuals (or families) for products for their own use. Organisations buy to enable them to provide goods and services to the final consumer. Organisational buying behaviour has many similarities to consumer behaviour. Both include the behaviour of human beings, whether individually or in groups. Organisational buyers do not necessarily act in a more rational way than individual consumers’. Organisational buyers are affected by environmental and individual factors, as outlined in the previous section. A difference in organisational buying is that many products are more complex and require specialist knowledge. As many products are changed according to the specifications of the buyer there is more communication and negotiation between buyer and sellers. Often, organisational purchases, especially those that entail large amounts of investment and that are new to the company, involve many people at different levels. The sales task will be to influence as many of these stakeholders as possible and may involve multilevel selling by means of a sales team, rather than an individual salesperson (Corey, 1991). Although organisational buyers are affected by personal factors as well, organisational buying decisions are often made on economic and technical criteria. This is because organisational buyers have to justify their considerations and decisions to other stakeholders of their organisation (Jobber and Lancaster, 2009). After-sales service is also very important in organisational buying and suppliers are often evaluated quite rigorously after purchase. In general, organisational markets have fewer, larger buyers who are geographically concentrated. Another aspect of organisational buying is the nature of derived demand. That is, demand for organisational goods is derived from consumer markets. If demand for the end product consumer good falls then this has an effect along the production line to all the inputs. So, in organisational marketing the end consumers should not be ignored and trends should be continuously monitored (Hollensen, 2006). One of the main differences from consumer buying is that organisational buying usually involves group decision making (known as the ‘decision-making unit’ (DMU) or sometimes referred to as the buying centre). In such a group individuals may have dif- Kapitel_2.indd 79 03.08.2010 12:46:35 Uhr

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Marketing – A Relationship Perspective

Moderne Grundlange zum Marketing

Das Lehrbuch behandelt eines der wichtigsten und aktuellsten Themenfelder des modernen Marketings. Der Ansatz verbindet dabei den klassischen Ansatz der strategischen Marketingplanung und seiner Instrumente mit dem neuen Ansatz des Relationship Marketing. Der ganzheitliche Ansatz des Buches umfasst dabei die aktuellen Marketing-Grundlagen, Praxisbeispiele sowie anwendungsorientierte Fallstudien und eignet sich somit ideal sowohl für Manager und Entscheidungsträger im Marketing-Bereich, Studenten in Bachelor- und Materstudiengängen sowie Dozenten und Trainer.