Consumer Buying Behavior Tutorial
Possibly the most challenging concept in marketing deals with understanding why buyers do what they do (or don’t do). But such knowledge is critical for marketers since having a strong understanding of buyer behavior will help shed light on what is important to the customer and also suggest the important influences on customer decision-making. Using this information, marketers can create marketing programs that they believe will be of interest to current as well as potential customers.
As you might guess, factors affecting how customers make decisions are extremely complex. Buyer behavior is deeply rooted in psychology with dashes of sociology thrown in just to make things more interesting. Since every person in the world is different, it is impossible to have simple rules that explain how buying decisions are made. But those who have spent many years analyzing customer activity have presented us with useful “guidelines” in how someone decides whether or not to make a purchase.
In fact, pick up any textbook that examines customer behavior and each seems to approach it from a different angle. The perspective we take is to touch on just the basic concepts that appear to be commonly accepted as influencing customer buying behavior. We will devote two sections of the Principles of Marketing Tutorials to customer behavior. In this tutorial, we will examine the buying behavior of consumers (i.e., when people buy for personal reasons) while in the Business Buying Behavior Tutorial we will examine factors that influence buyer’s decisions in the business market.
Why Consumers Buy
As we discussed in the What is Marketing? Tutorial, customers make purchases in order to satisfy needs. Some of these needs are basic and must be filled by everyone on the planet (e.g., food, shelter) while others are not required for basic survival and vary depending on the person. It probably makes more sense to classify needs that are not a necessity as wants or desires. In fact, in many countries where the standard of living is very high, a large portion of the population’s income is spent on wants and desires rather than on basic needs.
In this tutorial when we mention the consumer we are referring to the actual buyer, the person spending the money. But is should also be pointed out that the one who does the buying is not necessarily the user of what is bought and that others may be involved in the buying decision in addition to the actual buyer. While the purchasing process in the consumer market is not as complex as the business market, having multiple people involved in a purchase decision is not unusual. For example, in planning for a family trip the mother may make the hotel reservations but others in the family may have input on the hotel choice. Similarly, a father may purchase snacks at the grocery store but his young child may be the one who selected it from the store shelf.
So understanding consumer purchase behavior involves not only understanding how decisions are made but also understanding the dynamics that influence purchases.
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What Influences Purchasing
As we discussed, the decision-making process for consumers is anything but straightforward. There are many factors that can affect this process as a person works through the purchase decision. The number of potential influences on consumer behavior is limitless. However, marketers are well served to understand the KEY influences. By doing so they may be in a position to tailor their marketing efforts to take advantage of these influences in a way that will satisfy the consumer and the marketer (remember this is a key part of the definition of marketing).
For the purposes of this tutorial, we will break these influences down into three main categories: Internal, External and Marketing. However, those interested in learning more about customer buying activity may want to consult one or more consumer behavior books, where they will find additional methods for explaining buyer behavior.
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For the most part, the influences are not mutually exclusive. Instead, they are all interconnected and, as we will see, work together to form who we are and how we behave. For each of the influences that are discussed, we will provide a basic description and also suggest its implication to marketers. Bear in mind, we only provide a few marketing implications for each influence; clearly there are many more.
Internal Influences on Buying Behavior
We start our examination of the influences on consumer purchase decisions by first looking inside ourselves to see which are the most important internal factors that affect how we make choices.
Perceptual Filter
Perception is how we see ourselves and the world we live in. However, what ends up being stored inside us doesn’t always get there in a direct manner. Often our mental makeup results from information that has been consciously or subconsciously filtered as we experience it, a process we refer to as a perceptual filter. To us this is our reality, though it does not mean it is an accurate reflection on what is real. Thus, perception is the way we filter stimuli (e.g., someone talking to us, reading an online blog posting) and then make sense out of it.
Perception has several stages:
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Stage 1: Exposure – sensing a stimulus (e.g. seeing an advertisement)
Stage 2: Attention – an effort to recognize the nature of a stimulus (e.g. recognizing it is an advertisement)
Stage 3: Awareness – assigning meaning to a stimulus (e.g., humorous advertisement for particular product)
Stage 4: Retention – adding the meaning to one’s internal makeup (i.e., product has fun advertisements)
How these steps are eventually carried out depends on a person’s approach to learning. By learning we mean how someone changes what they know, which in turn may affect how they act. There are many theories of learning, a discussion of which is beyond the scope of this tutorial, however, suffice to say that people are likely to learn in different ways. For instance, one person may be able to focus very strongly on a certain advertisement and be able to retain the information after being exposed only one time while another person may need to be exposed to the same advertisement many times before he/she even recognizes what it is. Consumers are also more likely to retain information if a person has a strong interest in the stimulus. If a person is in need of new car they are more likely to pay attention to a new advertisement for a car while someone who does not need a car may need to see the advertisement many times before they recognize the brand of automobile.
Marketing Implications: Marketers spend large sums of money in an attempt to get customers to have a positive impression of their products. But clearly, the existence of a perceptual filter suggests that getting to this stage is not easy. Exposing consumers to a product can be very challenging considering the amount of competing product messages (ads) that are also trying to accomplish the same objective (i.e., advertising clutter). So marketers must be creative and use various means to deliver their message. Once the message reaches consumer it must be interesting enough to capture their attention (e.g., talk about the product’s benefits). But paying attention to the message is not enough. For marketers, the most critical step is the one that occurs with awareness. Here marketers must continually monitor and respond if their message becomes distorted in ways that will negatively shape its meaning. This can often happen due, in part, to competitive activity (e.g., comparison advertisements). Finally, getting the consumer to give positive meaning to the message they have retained requires the marketer make sure that consumers accurately interpret the facts about the product.
Knowledge
Knowledge is the sum of all information known by a person. It is the facts of the world as she/he knows it and the depth of knowledge is a function of the breadth of worldly experiences and the strength of an individual’s long-term memory. Obviously, what exists as knowledge to an individual depends on how an individual’s perceptual filter makes sense of the information it is exposed to.
Marketing Implications: Marketers may conduct research that will gauge consumers’ level of knowledge regarding their product. As we will see below, it is likely that other factors influencing consumer behavior are in large part shaped by what is known about a product. Thus, developing methods (e.g., incentives for watching a product video) to encourage consumers to accept more information (or correct information) may affect other influencing factors.
Attitudes
In simple terms, attitude refers to what a person feels or believes about something. Additionally, attitude may be reflected in how an individual acts based on his or her beliefs. Once formed, attitudes can be very difficult to change. Thus, if a consumer has a negative attitude toward a particular issue it will take considerable effort to change what they believe to be true.
Marketing Implications: Marketers facing consumers who have a negative attitude toward their product must work to identify the key issues shaping a consumer’s attitude then adjust marketing decisions (e.g., advertising) in an effort to change the attitude. For companies competing against strong rivals to whom loyal consumers exhibit a positive attitude, an important strategy is to work to see why consumers feel positive toward the competitor and then try to meet or beat the competitor on these issues. Alternatively, a company can try to locate customers who feel negatively toward the competitor and then target its efforts to this group.
Personality
An individual’s personality relates to perceived personal characteristics that are consistently exhibited, especially when one acts in the presence of others. In most, but not all, cases the behaviors one projects in a situation is similar to the behaviors a person exhibits in another situation. In this way, personality is the sum of sensory experiences others get from experiencing a person (i.e., how one talks, responds in certain situations, etc.). While one’s personality is often interpreted by those we interact with, the person has their own vision of their personality, called self-concept, which may or may not be the same has how others view us.
Marketing Implications: For marketers, it is important to know how consumers make purchase decisions to support their self-concept. Using research techniques to identify how customers view themselves may give marketers insight into products and promotion options that are not readily apparent. For example, when examining consumers, a marketer may initially build marketing strategy around more obvious clues to consumption behavior, such as consumer’s demographic indicators (e.g., age, occupation, income). However, in-depth research may yield information that shows consumers are purchasing products to fulfill self-concept objectives that have little to do with the demographic category they fall into (e.g., senior citizen may be making purchases that make them feel younger). Appealing to the consumer’s self-concept needs could expand the market to which the product is targeted.
Lifestyle
This influencing factor relates to the way we live through the activities we engage in and interests we express. In simple terms, it is what we value out of life. Lifestyle is often determined by how we spend our time and money. Additionally, customers often associate with others who share similar lifestyles.
Marketing Implications: Products and services are purchased to support consumers’ lifestyles. Marketers have worked hard researching how consumers in their target markets live their lives since this information is key to developing products, suggesting promotional strategies, and even determining how best to distribute products. The fact that lifestyle is so directly tied to marketing activity will be further examined as we discuss developing target market strategies (see Targeting Markets Tutorial).
Motivation
Motivation relates to our desire to achieve a certain outcome. Many internal factors we have already discussed can affect a customer’s desire to achieve a certain outcome but there are others. For instance, when it comes to making purchase decisions, customers’ motivation could be affected by such issues as financial position (e.g., Can I afford the purchase?); time constraints (e.g., Do I need to make the purchase quickly?); overall value (e.g., Am I getting my money’s worth?); and perceived risk (e.g., What happens if I make a bad decision?).
Marketing Implications: Motivation is also closely tied to the concept of involvement, which relates to how much effort the consumer will exert in making a decision. Highly motivated consumers will want to get mentally and physically involved in the purchase process. Not all products have a high percentage of highly involved customers (e.g., customers spend little time shopping for milk) but marketers who market products and services that may lead to high level of consumer involvement should prepare options that will be attractive to this group. For instance, marketers should make it easy for consumers to learn about their product (e.g., information on website, free video preview) and, for some products, allow customers to experience the product (e.g., free trial) before committing to the purchase.
Roles
Roles represent the position we feel we hold or others feel we should hold when dealing in a group environment. These positions carry certain responsibilities, yet it is important to understand that some of these responsibilities may, in fact, be perceived and not spelled out or even accepted by others. In support of their roles, consumers will make product choices that may vary depending on which role they are assuming. As an illustration, an employee responsible for selecting snack food for an office party which the company’s CEO will be attending, may choose higher quality snack products than that person would normally purchase for their family.
Marketing Implications: Advertisers often show how the benefits of their products aid consumers as they perform certain roles. Typically, the underlying message of this promotional approach is to suggest that using the advertiser’s product will help raise one’s status in the eyes of others while using a competitor’s product may have a negative effect on status.
External Influences on Buying Behavior
Consumer purchasing decisions are often affected by factors that are outside of their control but have direct or indirect impact on how we live and what we consume.
Culture
Culture represents the behavior, beliefs and, in many cases, the way we act which is learned by interacting with and observing other members of society. In this way, much of what we do is shared behavior, passed along from one member of society to another. Yet culture is a broad concept that, while of interest to marketers, is not nearly as important as understanding what occurs within smaller groups or subcultures.
Customers simultaneously belong to multiple subcultures whose cultural attributes may be different. For instance, people may simultaneously belong to different groups based on ethnicity, religious beliefs, geographic location, musical tastes, sports team allegiance, environmental concerns, and countless others. In a business situation, there exist subcultures within an organization. For example, the organization’s formal policies and procedures may be pivotal in developing an overall corporate culture, while other subcultures are developed in less formal ways (e.g., members of the company bowling team).
Marketing Implications: As part of their efforts to convince customers to purchase their products, marketers often use cultural representations, especially in promotional appeals. The objective is to connect to consumers using cultural references that are easily understood and often embraced by the consumer. By doing so the marketer hopes the consumer feels more comfortable with or can relate better to the product since it corresponds with their cultural values. Additionally, smart marketers use strong research efforts in an attempt to identify differences in how subculture behaves. These efforts help pave the way for spotting trends within a subculture, which the marketer can capitalize on through new marketing tactics (e.g., new products, new sales channels, added value, etc.).
Group Membership
In addition to cultural influences, consumers belong to many other groups with which they share certain characteristics and which may influence purchase decisions. Often these groups contain opinion leaders or others who have major influence on what the customer purchases. Basic group membership for consumers may include:
- Social Class – This group represents the social standing one has within a society based on such factors as income level, education, occupation.
- Family – Someone’s family situation (e.g., family size) can have a strong effect on how purchase decisions are made.
- Associated Reference Groups – Consumers simultaneously belong to many other groups with which they associate (e.g., sports league, book club, etc.) and which may influence what they purchase.
- Dissociative Reference Groups – Consumers may also feel the need to disassociate with certain groups, which they do not want to belong to (e.g., an opposing political party) and which may influence purchase decisions that they believe will not place them in these groups.
Marketing Implications: Identifying and understanding the groups consumers belong to is a key strategy for marketers. Doing so helps identify target markets, develop new products, and create appealing marketing promotions to which consumers can relate. In particular, marketers seek to locate group leaders and others to whom members of the group look for advice or direction. These opinion leaders, if well respected by the group, can be used to gain insight into group behavior and if these opinion leaders accept promotional opportunities could act as effective spokespeople for the marketer’s products.
Purchase Situation
A purchase decision can be strongly affected by the situation in which people find themselves. In general, a situation is the circumstances a person faces when making a purchase decision, such as the nature of their physical environment, their emotional state, or time constraints. Not all situations are controllable, in which case a consumer may not follow their normal process for making a purchase decision. For instance, if a person needs a product quickly and a store does not carry the brand they normally purchase, the customer may choose a competitor’s product.
Marketing Implications: Marketers can take advantage of decisions made in uncontrollable situations in at least two ways. First, marketers can use promotional methods to reinforce a specific selection of products when the consumer is confronted with a particular situation. For example, automotive services can be purchased that promise to service vehicles if the user runs into problems anywhere and at anytime. Second, marketers can use marketing methods that attempt to convince consumers that a situation is less likely to occur if the marketer’s product is used. This can also be seen with auto products, where marketers explain that using their product will prevent unexpected damage to their vehicles.
Economic Conditions
The current state of economic conditions has a direct impact on buyers. While, in certain cases, a consumer’s financial status is controllable (i.e., able to control wasteful spending), in other instances what the consumer has available for spending is affected by economic factors that are beyond their control. Clearly, if someone has suddenly lost their job, the impact on purchasing may be immediate and force major adjustments in what is purchased. Additionally, expectation of future economic conditions could impact purchasing. For instance, if the sentiment exists that the economy is posed to grow than buyers may feel that engaging in purchasing of expensive items holds less risk than if the same decision were made during times when the forecast is for an economic slowdown.
Marketing Implications: As we note in the Managing External Factors Tutorial, it is vital for marketers to continually monitor changes occurring in the economy in which they operate. Monitoring can help alert an organization to the need for adjustments in their marketing strategy. For instance, monitoring may suggest the economy is expanding and may offer the potential for an increase in customer demand. This may lead the marketer to make adjustments in an effort to build a larger customer base (e.g., increase advertising, launch new products). Alternatively, indications the growth of the economy is slowing could signal that customer demand may soon be on the decline suggesting the marketer may need to make adjustments to help stimulate demand (e.g., lower prices, increase sales promotions). For organizations that target a wide geographic market, monitoring may include analysis of economic conditions on a national and possibly international level.? But for marketers serving highly targeted geographic locations, it is also important to monitor local economic conditions. For instance, large retailers with stores located in small towns may find decisions will need to be adjusted within individual stores given the economic conditions facing the market that each store serves.
Types of Consumer Purchase Decisions
Consumer purchasing is not only affected by internal and external influences, these are also affected by the type of purchases consumers make. Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some consumer purchase decisions are more complex than others requiring more effort by the consumer. Other decisions are fairly routine and require little effort. In general, consumers face four types of purchase decisions:
Minor New Purchase
These purchases represent something new to a consumer but in the consumer’s mind is not a very important purchase in terms of need, money, or other reason (e.g., status within a group).
Minor Repurchase
These are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought to other product options (i.e., consumer is loyal to a particular product).
Major New Purchase
These purchases are the most difficult of all purchases because the product being purchased is important to the consumer but the consumer has little or no previous experience making these decisions. The consumer’s lack of confidence in making this type of decision often (but not always) requires the consumer to engage in an extensive decision-making process..
Major Repurchase
These consumer purchase decisions are also important to the consumer, though, the consumer feels confident in making these decisions since they have previous experience purchasing the product.
For marketers it is important to understand how consumers treat the purchase decisions they face. If a company is targeting customers who feel a purchase decision is difficult (i.e., Major New Purchase), their marketing strategy may vary greatly from a company targeting customers who view the purchase decision as routine. In fact, the same company may face both situations at the same time; for some consumers the product is new, while others see the purchase as routine. The implication of buying behavior for marketers is that different purchasing situations require different marketing efforts.
The Consumer Decision-Making Process
So now that we have discussed the factors influencing consumer’s decision to purchase and the types of buying decisions consumers make, let’s examine the consumer decision making process itself. This process is presented in a sequence of 5 steps as shown below.
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However, whether a consumer will actually carryout each step depends on the type of purchase decision that is faced. For instance, for some repurchases the consumer may be quite loyal to the same brand they are used to buying. In this purchase situation (e.g., Minor Repurchase), the decision is a routine one (i.e., buy the same product) and little effort is involved in making a purchase decision. In cases of routine, brand loyal purchases consumers may skip several steps in the purchasing process since they know exactly what they want allowing the consumer to move quickly through the steps. But for more complex decisions, especially those involving an expensive purchase the buyer has not previously made, the purchasing process can extend for days, weeks, months, or longer (e.g., Major New Purchase). So in presenting these steps marketers should realize that, depending on the circumstances surrounding the purchase, the importance of each step may vary.
Step 1: Need/Want/Desire is Recognized
In the first step, the consumer has determined that for some reason she/he is not satisfied (i.e., consumer’s perceived actual condition) and wants to improve her/his situation (i.e., consumer’s perceived desired condition). For instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed. External factors can also trigger consumer’s needs. Marketers have long used methods, such as advertising, in-store displays, and even the intentional use of scent (e.g., perfume counters in retail stores), as triggers.
At this stage, the decision-making process may stall if the consumer is not motivated to continue (see Motivation). However, if the consumer does have the internal drive to satisfy the need they will continue to the next step.
Step 2: Search for Information
Assuming consumers are motivated to satisfy his or her need, they will next undertake a search for information on possible solutions. The sources used to acquire this information may be as simple as remembering information from past experience (i.e., memory) or the consumer may expend considerable effort to locate information from outside sources (e.g., internet search, talk with others, etc.). How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need, familiarity with available solutions, and the amount of time available to search.
To appeal to consumers who are at the search stage, marketers should make efforts to ensure consumers can locate information related to their product. For example, for marketers whose customers rely on the internet for information gathering, it may be critical to utilize certain strategies (i.e., search engine optimization) so that a link to product information appears on the first search page for likely keyword searches.
Step 3: Evaluate Options
Consumers’ search efforts may result in a set of options from which a choice can be made. It should be noted that there may be two levels to this stage. At level one the consumer may create a set of possible solutions to their needs (i.e., different product types) while at level two the consumer may be evaluating particular products (i.e., different individual brands) within each solution. For example, when someone moves to a new apartment and wants a service that will offer live television programs, he/she will likely have a few solutions to choose from, including subscribing to cable or using a live streaming service. Marketers need to understand how consumers evaluate product options and why some products are included in a consumer’s evaluation while others are not. Most importantly, marketers must determine which criteria consumers are using in their selection of possible options and how each criterion is evaluated. Returning to the live television example, marketing tactics will be most effective when the marketer can tailor their efforts by knowing: 1) what benefits are most relevant to consumers (e.g., picture quality, brand name, reliability, price, etc.), and 2) determining the order of importance of each benefit.
Step 4: Purchase
In many cases, the solution chosen by the consumer is the same as the product whose evaluation is the highest. However, this may change when it is actually time to make the purchase. The “intended” purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock; a competitor offers an incentive at the point-of-purchase (e.g., store salesperson mentions a competitor’s offer); the customer lacks the necessary funds (e.g., credit card not working); or members of the consumer’s reference group take a negative view of the purchase (e.g., friend is critical of the intended purchase). Marketers whose product is most desirable to the consumer must make sure the transaction goes smoothly. For example, internet retailers have worked hard to prevent consumers from abandoning online purchase (i.e., online shopping carts) by streamlining the checkout process. For marketers whose product is not the consumer’s selected product, last chance marketing efforts may be worth exploring, such as offering incentives to store personnel to “talk up” their product at the checkout line.
Step 5: After-Purchase Evaluation
Once the consumer has made the purchase they are faced with an evaluation of the decision. If the product performs below the consumer’s expectation then he/she will re-evaluate satisfaction with the decision. At the extreme, this may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product. Such evaluations are more likely to occur in cases of expensive or highly important purchases. To help ease the concerns consumers have with their purchase evaluation, marketers need to be receptive and even encourage consumer contact. Customer service centers and follow-up market research are useful tools in helping to address purchasers’ concerns.
As we’ve seen, consumer purchasing is quite complex. In our next tutorial, Business Buying Behavior, we will see that marketers must also have a thorough understanding of how business purchase decisions are made.