Chapter 5: Analyzing Consumer and Business Markets

What Influences Consumer Behavior?

• Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

A consumer's buying behavior is influenced by:

• Cultural Factors- Culture, subculture, and social class are particularly important influences on consumer buying behavior.
  • Culture-  the fundamental determinant of a person's wants and behavior
  • Subcultures- provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups, and geographic regions. 
  • Social Classes- are relatively homogeneous and enduring divisions in a society, hierarchically Ordered and with members who share similar values, interests, and behavior.
    • One classic depiction of social classes in the United States defined seven ascending levels:

1. lower lowers
2. upper lowers
3. working class
4. middle class
5. upper middles
6. lower uppers
7. upper uppers

• Social Factors- such as reference groups, family, and social roles and statuses affect our buying behavior.
  • Reference Groups- all the groups that have a direct (face-to­ face) or indirect influence on his or her attitudes or behavior.
    • Primary groups- the person interacts fairly continuously and informally, such as family, friends, neighbors, and coworkers.
    • Secondary groups- such as religious, professional, and trade-union groups, which tend to be more formal and require less continuous interaction.
      • Opinion leader- , the person who offers informal advice or information about a specific product or category, such as which of several brands is best or how a particular product may be used.
  • Cliques- small groups whose members interact frequently.
    • One team of viral marketing experts cautions that although influencers or "alphas" start trends, they are often too introspective and socially alienated to spread them.
    • They advise marketers to cultivate "bees; hyper devoted customers who are not satisfied just knowing about the next trend but live to spread the word.
    • More firms  are in fact finding ways to identify  and  actively engage  passionate brand  evangelists and  potentially lucrative customers online
  • Family- The family is society's most important consumer buying organization, and family members constitute the most influential primary reference group.
  • Roles and  Status- We each  participate in  many  groups-family, clubs,  organizations-and these are often  an  important source  of information and  help  to define  norms for behavior.
    • Role- consists of the activities a person is expected to perform.
    • Status- is connoted by a role. People choose products that reflect and communicate their role and their actual or desired status in society.
• Personal Factors- personal characteristics that influence a buyer's decision include age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values.
  • Age and Stage  in  the  Life Cycle- Our taste  in food,  clothes, furniture,  and  recreation is often  related  to our  age.
    • family life cycle
    • psychological life-cycle
    • critical life events or transitions-marriage
  • Occupation and Economic Circumstances- Occupation influences consumption patterns.    
    • Both product and brand choice are greatly affected by economic circumstances like spendable income (level, stability, and pattern over time), savings and assets (including the percentage that is liquid), debts, borrowing power, and attitudes toward spending and saving.
  • Personality and Self-Concept
    • By personality- a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli including buying behavior.
    • Brand personality- the specific mix of human traits that we can attribute to a particular brand. Stanford's Jennifer Aaker researched brand personalities and identified the following traits: sincerity, excitement, competence, sophistication, and ruggedness Y Cross-cultural studies have found that some but not all of these traits apply outside the United States 
      • actual self-concept- how we view ourselves
      • ideal self-concept- how we would like to view ourselves
      • others' self-concept- how we think others see us
  • Lifestyle and Values- People from the same subculture, social class, and occupation may adopt quite different lifestyles
    • Lifestyle- a person's pattern of living in the world as expressed in activities, interests, and opinions.
    • Core values- the belief systems that underlie attitudes and behaviors.

Managing Business-to-Business Customer Relationships

• Business suppliers and customers are exploring different ways to manage their relationships.
  • The Benefits of Vertical Coordination:

1. Basic buying and selling-Simple, routine exchanges with moderate levels of cooperation and information exchange.
2. Bare bones- These relationships require more adaptation by the seller and less cooperation and information exchange.
3. Contractual transaction-Defined by contract, these generally have low levels of trust, cooperation, and interaction.
4. Customer supply-In this traditional supply situation, competition rather than cooperation is the dominant form of governance.
5. Cooperative systems-Participants are united in operational ways, but neither demonstrates structural commitment through legal means or adaptation.
6. Collaborative-Much   trust   and   commitment through    collaboration    ca n   lead   to   true partnership.
7. Mutually adaptive-Buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation.
8. Customer is king-In this close, cooperative relationship, the seller adapts to meet the customer's needs without expecting much adaptation or change in exchange.

• Risks and Opportunism in Business Relationships

• Specific investments- are expenditures tailored to a particular company and value chain partner (investments in company-specific training, equipment, and operating procedures or systems).
• Opportunism- is "some form of cheating or undersupply relative to an implicit or explicit contract