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Buyer behavior

1. Defines what buyer behavior is,
2. Describes how the buyer goes about selecting a good/service. and
3. Demonstrate how you can use your understanding of buyer behavior to develop a marketing mix that will position the product so that a prospective buyer might consider it as choice.

Hint: Consider how learning and memory theory can be applied here.

Solution Preview

To accommodate differences in consumers across nations, marketers need to gain a strong understanding of consumer behavior before adjusting marketing decisions for different countries.
See the below article for the explanation. The article is also at:
http://ollie.dcccd.edu/mrkt2370/Chapters/ch4/4markets.html
Markets
Copyright © 1999 by Gemmy Allen, all rights reserved.
Chapter 4 Study Guide
Markets are the focal point for all marketing decisions. A market is people or organizations with wants to satisfy, money to spend, and the willingness to spend it. Organizations closely monitor markets in order to adjust to changing tastes and preferences. For example, in 1995 the U.S. Internet market was described as 67% male, 80% age 18-44, 51% with household incomes $35,000 to $75,000, 19% employed in sales and 15% employed in engineering. (See Defining the Internet Opportunity, O'Reilly & Associates, 10/1/95.) In 1999, the U.S. Internet market more closely resembles the adult demographics of the United States. (Also, see Statistical Agencies - International.) Since the compositions of markets are constantly changing, marketers must understand buyer behavior -- why people buy or don't buy products. To accommodate differences in consumers across nations, marketers need to gain a strong understanding of consumer behavior before adjusting marketing decisions for different countries. Successful organizations know their markets, know how to reach their markets, and know when wants change and adjust their marketing efforts accordingly.
Market Segmentation
In order to identify its potential buyers, organizations choose to segment or not to segment a market. An organization that does not segment chooses a mass-market -- the same product is offered to all customers. Henry Ford's Model T is the classic example of mass marketing. Marketers segment (divide) a market because different groups within the market have different needs. To be successful, the chosen segment must be identifiable and measurable, profitable, economically accessible, and exhibit a relatively homogeneous response function to the marketing efforts designed for it. Marketers focus their efforts on target markets, or groups of customers with similar needs, rather than on the entire market. (Many of the models in advertisements are chosen to represent the target market.) The marketing concept holds that marketing will be more effective if it is tailored to the unique needs of each target market. For example, even Coca-Cola is adapted to each country's local tastes and conditions, by being less sweet or less carbonated in certain countries.
Two broad segments of markets are consumer and organizational. Consumer markets can be distinguished from organizational markets by answering the following questions. WHO bought it? WHY did they buy it? Consumer markets are individuals and households that buy products for personal consumption. Organizational markets buy products for further processing or for use in their organization. They refer to marketers as suppliers or vendors. Most people are surprised to learn that organizational markets account for a significant percentage of all purchases made and are much larger in terms of dollars than consumer markets. Some marketers focus only on organizational markets. However, marketers can increase their sales by serving both organizational markets and consumer markets. The Seattle Times reported in the February 7, 1999 edition that Microsoft plans to reorganize its business into four markets - the Internet, corporations, home offices or telecommuters, and developers or software programmers. Another example of serving the organizational and consumer is the Hummer.
Consumer markets
Consumer markets are individuals and households that buy products for personal consumption. Five categories are commonly used to segment the consumer market -- geographic, demographic, psychographic, benefits, and usage. Geographic segmentation divides the market based upon the geographic distribution of population (regional, urban, suburban, and rural). Demographics are the vital statistics that describe a population (gender, age, income, family size, education, social class, and ethnicity). Psychographic segmentation involves examining attributes related to how a person thinks, feels, and behaves (personality, lifestyles, and values). A market can be segmented based on the benefits desired from the product. A classic example is brands of toothpaste designed to satisfy different benefits sought by consumers (no cavities, whiter teeth, fresh breath, and sex appeal). Another product-related basis for segmentation is the product usage rates of consumers (nonusers, light users, medium users, and heavy users). Marketers are very interested in the "heavy half" of the users of a product. Heavy users typically account for 80 percent of total purchases. (A classic example is young, male beer drinkers.) In general, marketers use several of these variables to describe their markets. For example, researchers at the wireless phone industry's largest convention held the week of February 8, 1999 in New Orleans described prime wireless customers as predominately men, upper-income, business users, and heavy users. (Source: Survey of 803 wireless users by Peter D. Hart Research Associates, Inc.) The complex interplay of social and psychological factors, as well as the act of buying a product influences consumer purchases.
Social Factors
Social factors influence buying decisions. Culture is the complex of symbols and artifacts created by a society and handed down from generation to generation as determinants and regulators of human behavior. For example, a child in the U.S. is exposed to the cultural values of achievement and success, activity and involvement, efficiency and practicality, progress, material comfort, individualism, freedom, humanitarianism, youthfulness, and fitness and health. Cultural values vary from country to country. Marketers need to pay special attention to cultural differences when selling to other countries.
A culture contains several subcultures, or groups that exhibit characteristic behavior pattern sufficient to distinguish them from other groups within the same culture. (Examples of subcultures include Hispanic, African-American, and Asian American within the U.S. population). In addition to factors such as race, subcultures may be based upon nationality, religion and urban-rural identification. When a subculture has specific purchasing patterns, marketers need to understand how best to serve their needs.
Buying a behavior is influenced by social classes. A social class is a relatively permanent and ordered division in a society whose members share similar values, interests, and behaviors. Variables that define social class include education, occupation, and type of residential neighborhood. It is interesting to note that income is not one of the determining factors. Different social classes respond differently to a seller's marketing program. In the U.S., social scientists have identified seven American social classes.

a) Upper-uppers (less than 1 percent) are the social elite who have inherited wealth and have well-known family backgrounds. They tend to be conservative and often serve as reference groups for others. They live in large homes in exclusive neighborhoods and buy expensive products.
b) Lower-uppers (about 2 percent) are "the new rich," having earned their wealth. Much of the time, they have more money than the upper uppers and want to be accepted by the upper uppers.
c) Upper-middles (12 percent) are primarily "career" oriented business and professional people. They are well educated, have a strong desire for success, and encourage their children to do well. They are joiners and civic minded. They buy products that signify status and belong to private clubs.
d) Middle class (32 percent) is made up of average-pay-white-collar and blue-collar workers who live on "the better side of town" and try to "do the proper things." Their homes are well cared-for and they buy products that are popular.
e) Working class (38 percent) consists of those who lead a "working class lifestyle." They are tied closely to family for support and have a local orientation. The working class maintains sharper sex role divisions and stereotyping. They are concerned about security, live in smaller homes, drive larger cars, and watch bigger television sets than the middle class.
f) Upper-lowers (9 percent) or "working poor" work and are not on welfare. However, their living standard is just above the poverty line. ...

Solution Summary

Buyer behaviour is explored.

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