Buyer Behavior PDF

5 and 6 Buyer Behavior Consumer (B2C) and organizational (B2B) Definition: (B2C) Consumer behavior can be defined as actions a person takes in purchasing and using goods and services. It includes the mental and emotional processes and physical activities that people engage in when they se...

5 and 6 Buyer Behavior Consumer (B2C) and organizational (B2B) Definition: (B2C) Consumer behavior can be defined as actions a person takes in purchasing and using goods and services. It includes the mental and emotional processes and physical activities that people engage in when they select, purchase, and use products to satisfy needs and desire. Consumer Behavior in KSA 1. 47% of Saudi consumers agree that experiences are more important than possessions, as they aspire to explore and indulge in the world outside the home. 2. 68% of Saudi consumers are watchful’ about companies’ green motivations as Sustainability plays an increased role in purchase decisions. 3. Saudi Women are in anchor roles hence brands need to embrace inclusivity & integrate women’s stories into their brand campaigns and strategies 4. Huge potential in the ‘experience’ space – an opportunity to re-vamp loyalty & rewards programs 5. Saudi consumers prioritize sustainability hence measures coupled with economic consideration are key to driving consumer adoption (B2B) (B2C)  Consumer Decision Making Process 1. Recognition of a need or problem a. Internal search (e.g. your past experience) 2. Search for information b. External search (you ask relatives and friends) 3. Evaluation of information/alternatives a. Beliefs b. Attitudes Buying a PC (Laptop) c. Perception 4. Purchase a. Satisfaction 5. Post-purchase (outcomes) b. Dissatisfaction Choosing major at DCC 1. Need- Diploma/Associate Degree (go to KFUPM or other) 2. Search for information Friends and family / internet / social media / graduates from dcc DCC, JUC, Dammam Uni, many other majors - ACCT, HRM, CIT, SCM, MKT, Engi, Medi etc 3. Evaluated all above information 4. After evaluation - You decided to take one major 5. Outcome (satisfied or dissatisfied)  Consumer Decision Making Process 1. Recognition of a need or problem - Problem recognition perceives a difference between a person’s ideal and actual situations big enough to trigger a decision. 2. Search for information Consumer search for information about which product or service might satisfy the newly discovered need. Internal search-Scanning your memory for previous experiences with products or brands is called External search - When internal search in insufficient looking for sources, such as relatives and friends whom the consumer trusts 3. Evaluation of alternatives - Consumers evaluate many attributes related to products (e.g. buying a computer). 4. Purchase - Having examined the alternatives factors, consumer need to make a decision (buy or not buying). 5. Post-purchase (outcomes) - After buying a product, the consumer: a. Compares it with his/her expectations and…either satisfied or dissatisfied. Cognitive dissonance is the feeling of post-purchase psychological tension or anxiety consumers may experience when faced with two or more highly attractive alternatives. Influences on the consumer purchase decision Culture The values, ideas, attitudes, and symbols that people adopt to communicate, interpret, and interact as members of a society Personal Influence Opinion Leaders (People who influence consumer behavior through word-of-mouth communications based on their interest or expertise). Eg. Some firms use celebrities as spokespersons to represent their products. Personality - The image an individual would like to display to others. Attitude is a response to an object or class of objects in a consistently favorable or unfavorable way Lifestyle Person’s pattern of living expressed through Activities, Interest, and Opinions(AIO) eg. Price conscious, Fashion Conscious  Consumer Decision Making Involvement: The level of importance, interest, or personal relevance generated by a product or a decision, which varies by the decision at hand and by the person’s needs or motives. High and low involvement decisions (Eg. Home Vs. Coke Cola) Decision Making: High-involvement decisions (extended problem solving): Purchasing decisions that involve high levels of importance or personal relevance, thorough information processing, and substantial differences between alternatives. Finding the Best Alternative Low-Involvement decisions (routine problem solving): Purchasing decision that involve relatively little personal interest or importance associated with a purchase. Impulse purchases: Impulse purchases are decisions made with little or no cognitive effort. Maslow Hierarchy of Needs Needs are organized in a hierarchy in which more basic needs must be more or less met before higher needs. 1. Physiological needs 2. Safety needs 3. Social needs 4. Personal needs 5. Self-actualization  Business – to – Business (B2B) Buying Behavior Definition: B2B buying behavior refers to decision making and other activities of organizations as buyers. A key element in B2B buying is the selection of Suppliers, Sources or Vendors. Supply Chain : the integration of business processes from end user through original suppliers that provides goods, services, and information that add value for customers. B2B Buying Behavior Categories of Organizations 1. Business/industrial markets: including manufacturers of tangible goods and firms that provide services such as health care, entertainment, and transportation; 2. Government markets: such as federal, state, and local government purchasing. Government is the largest customer in the government market. The government market is the largest in the world. 3. Reseller markets: Reseller market is made up of firms that purchase goods and in turn sell them to others at a gain such as the wholesalers and retailers;  Differences between (B2B) and Consumer Buying (B2C) 1. B2B buyers are fewer in number compared to B2C 2. B2B transaction value is much larger compared to B2C 3. B2B purchase decision are always influenced by multiple sources than compared to B2C 4. B2B buying situations are more rationale than B2C 5. B2B purchased products are often complex, expensive and bought in large quantity compared to B2C 6. B2B selling/buying may be more riskier than B2C (expensive) 7. Negotiation is often important in organizational buying than B2C (1 hallala x 1m qty = SAR10,000 saving) 8. Close and long-term relationship is very important in B2B than B2C 9. Reciprocity is an industrial buying practice in which two organizations agree to purchase each other’s products and services as opposed to B2C. (We’ll buy tires from you, you’ve to by our cars) 10.B2B buying is closely tied to economic fluctuations in consumer market  The B2B Buying Process The most complex purchase decisions involve this sequence: Recognize need/problem Computer Product characteristics & Desktop | 200 Quantity quantity Product specifications i5, 8GB RAM, 250GB HDD etc Jarir, Extra, EDDY suppliers Locate suppliers from Dossary tower etc Evaluate and select suppliers Evaluate based on price, service, payment term, free offers etc Jarir Make purchase and evaluate Make purchase and evaluate performance of computers Question: Describe B2B buying process with a flowchart and example  The Buying Center / B2B buying process The buying center/Decision Making Unit (DMU) for an organization is responsible for selecting suppliers and arranging purchase terms. It is made up of people involved in routine and non-routine purchase decisions. They may come from different departments or levels in an organization. They may play any roles like: i. Users are the people in the organization who actually use the offering. ii. Influencers affect the buying decision, usually by helping define the specifications for what is bought. iii. Buyers have formal authority and responsibility to select the supplier and negotiate the terms of the contract. iv. Deciders have the formal or informal power to select or approve the supplier that receives the contract. v. Gatekeepers: Control the flow of information in the buying center and keep information from reaching people performing the other 4 roles. Type of Buying Decisions Based on complexity B2B purchase decision can be classified into three categories New-Task: the buying problem is new and a great deal of information must be gathered. These are relatively infrequent but cost of making a wrong decision is high. Modified Rebuy: calls for evaluation of new alternatives; could consider new suppliers for current products or new products for current suppliers. Straight Rebuy Most common type; products and services purchases previously are simply re-purchased. Delivery, performance, and price are critical considerations.