Personal Selling: Consumer buying behaviour

Here is a Methodically & Scientifically derived understanding on PERSONAL SELLING: CONSUMER BUYING BEHAVIOR vs. ORGANIZATIONAL BUYING

Lets first look at the purchase patterns:

Final consumers purchase for: personal, family, or household use

Organizational consumers purchase for: further production, usage in operating the organization, and/or resale to other consumers

Consumer Buying Behavior
the decision processes and acts of final household consumers associated with evaluating, buying, consuming, and discarding products for personal consumption

Consider the purchase an automobile. You generally will not consider different options until some event triggers a need, such as a problem needing potentially expensive repair. Once this need has put you "on the market", you begin to ask your friends for recommendations regarding dealerships and car models. After visiting several dealerships, you test drive several models and finally decide on a particular model. After picking up your new car, you have doubts on the way home, wondering if you can afford the monthly payments, but then begin to wonder if instead you should have purchased a more expensive but potentially more reliable model. Over the next five years, the car has several unexpected breakdowns that lead you to want to purchase a different brand, but you have been very happy with the services of the local dealership and decide to again purchase your next car there.

In this particular case, the following generic model of consumer decision making appears to hold:

=====>need recognition    =====>information search        =====>evaluation of alternatives            =====>purchase decision                =====>postpurchase behavior 

Now consider the purchase of a quart of orange juice. You purchase this product when you do your grocery shopping once per week. You have a favorite brand of orange juice and usually do your grocery shopping at the same store. When you buy orange juice, you always go to the same place in the store to pick it up, and never notice what other brands are on the shelf or what are the prices of other brands. How is it that the generic model above works differently in this second scenario? Why does it work differently? Why would we generally need the ministrations of a sales person in the sale of a car, but we generally do not need the help of a salesperson in the purchase of orange juice?

How can the marketer of orange juice get a consumer like you to exert more effort into information search or to consider alternative products? How is it that the marketer of your brand got you to ignore alternative competing brands? What is the involvement of salespeople in sales promotions that might be associated with products such as orange juice?

Consumer behavior researchers are not so interested in studying the validity of the above generic model, but are more interested in various factors that influence how such a model might work.

INFLUENCES ON THE GENERIC MODEL

• external
• group
  -e.g., cultural, family, reference group influences
• environmental/situational
  -e.g., time of day, temperature and humidity, etc.
• inernal
• lifestyle, personality, decision making process, motivation, etc.

GROUP INFLUENCES ON CONSUMER BEHAVIOR

Culture
the set of basic values, beliefs, norms, and associated behaviors that are learned by a member of society

Note that culture is something that is learned and that it has a relatively long lasting effect on the behaviors of an individual. As an example of cultural influences, consider how the salesperson in an appliance store in the U.S. must react to different couples who are considering the purchase of a refrigerator. In some subcultures, the husband will play a dominant role in the purchase decision; in others, the wife will play a more dominant role.

Social Class
a group of individuals with similar social rank, based on such factors as occupation,education, and wealth

Reference Groups
groups, often temporary, that affect a person's values, attitude, or behaviors

E.g., your behaviors around colleagues at work or friends at school are probably different from your behaviors around your parents, no matter your age or stage in the family life cycle. If you were a used car salesperson, how might you respond differently to a nineteen year old prospect accompanied by her boyfriend from one accompanied by two girlfriends?

opinion leader

a person within a reference group who exerts influence on others because of special skills, knowledge, personality, etc.

You might ask the webmaster at work for an opinion about a particular software application. Software manufacturers often give away free beta copies of software to potential opinion leaders with the hope that they will in turn influence many others to purchase the product.

Family
a group of people related by blood, marraige, or other socially approved relationship

ENVIRONMENTAL/SITUATIONAL INFLUENCES ON CONSUMER BEHAVIOR
circumstances, time, location, etc.

Do you like grapes? Do you like peas?

You might like grapes as a snack after lunch, but probably not as a dessert after a fancy meal in a restaurant. You might like peas, but probably not as a topping on your pancakes. Everyday situations cause an interaction between various factors which influence our behaviors. If you work for tips (a form of incentive related to commission) as a waiter or waitress, you must certainly be aware of such interactions which can increase or decrease your sales.

If you are doing your Saturday grocery shopping and are looking for orange juice, you are probably much more sensitive to price than if you stop at the quick store late at night, when you are tired and cranky, after a late meeting at the office. A prospect shopping for a new automobile while debating the wisdom of a necessary expensive repair to his car might be more interested in what cars are on the lot than in shopping for the best deal that might involve a special order.

INTERNAL INFLUENCES ON CONSUMER BEHAVIOR

personality
a person's distinguishing psychological characteristics that lead to relatively consistent and lasting responses to stimuli in the environment

We are each unique as individuals, and we each respond differently as consumers. For example, some people are "optimizers" who will keep shopping until they are certain that they have found the best price for a particular item, while other people are "satisficers" who will stop shopping when they believe that they have found something that is "good enough." If you are a salesperson in a retail shoe store, how might you work differently with these two personalities?

lifestyle and psychographics

• lifestyle is a pattern of living expressed through a person's activities, interests, and opinions
• psychographics is a technique for measuring personality and lifestyles to developing lifestyle classifications

motivation: multiple motives

Consumers usually have multiple motives for particular behaviors. These can be a combination of:

• manifest
  known to the person and freely admitted
• latent
  unknown to the person or the person is very reluctant to admit

Note: different motives can lead to the same behavior; observing behavior is not sufficient to determine motives.

What are the thoughts of John's friend?
What is John's manifest motive?
What might be his latent motive?

How might a salesperson discover these motives? What features should a salesperson emphasize?

involvement
has to do with an individual's

• intensity of interest in a product and the
• importance of the product for that person

The purchase of a car is much more risky than the purchase of a quart of orange juice, and therefore presents a higher involvement situation. This modifies the way that the generic model works.

As involvement increases, consumers have greater motivation to comprehend and elaborate on information salient to the purchase. A life insurance agent, for example, would typically be more interested in contacting a young couple who just had a baby than an eighteen year old college student - even though the new parents might be struggling to make ends meet while the student is living more comfortably. Although the annual investment into a policy is much lower if started at a younger age, most young college students are not open to thinking about long term estate planning. A young couple with a new child, however, is much more open to thinking about issues associated with planning for the child's future education, saving to buy a house, or even saving to take an extended vacation upon retirement.

TYPES OF CONSUMER PROBLEM-SOLVING PROCESSES

routenized

• used when buying frequently purchased, low cost items
• used when little search/decision effort is needed
• e.g., buying a quart of orange juice once per week

limited problem solving

• used when products are occasionally purchased
• used when information is needed about an unfamiliar product in a familiar product category

extended problem solving

• used when product is unfamiliar, expensive, or infrequently purchased
• e.g., buying a new car once every five years

Under what sorts of conditions would the assistance of a salesperson be needed? Not needed?

POST-PURCHASE CONSUMER BEHAVIOR

satisfaction

After the sale, the buyer will likely feel either satisfied or dissatisfied. If the buyer beleives that s/he received more in the exchange than what was paid, s/he might feel satisfied. If s/he believes that s/he received less in the exchange than what was paid, then s/he might feel dissatisfied. Dissatisfied buyers are not likely to return as customers and are not likely to send friends, relatives, and acquaintences. They are also more likely to be unhappy or even abusive when the product requires post-sale servicing, as when an automobile needs warranty maintenance.

The above idea can be modeled as Homans' basic exchange equation:

Profit = Rewards - Costs

Unfortunately, even a buyer who "got a good deal" with respect to price and other terms of the sale might feel dissatisfied under the perception that the salesperson made out even better.

This idea is called equity theory, where we are concerned with:

Outcomes of A (x) Inputs of A <vs.> Outcomes of B (x) Inputs of B

Consider, for example, that you have purchased a used car for $14,000 after finding that the "e;blue book" value is listed at $16,000. You are probably delighted with the purchase until you accidentally meet the prior owner who had received a trade-in of $10,000 on the car just a few days before. That the dealer appears to have received substantially greater benefit than you could lead to extreme dissatisfaction, even though you received good value for the money spent.

(Note that the selling dealer might actually have paid $12,000 for the car at a statewide dealer's auction, and then might have incurred another $1,000 in expenses associated with transporting the car and preparing it for sale. Management of buyer perceptions is very important!)

An issue related to this is attribution theory. According to attribution theory, people tend to assign cause to the behavior of others. Mary's life insurance agent advises her to purchase a whole life policy, while her accountant advises her, "buy term insurance and invest the difference.". The reason, explains the accountant, "is that insurance agents receive substantially higher commission payments on sales of whole life policies."

If Mary believes that the insurance agent is recommending a product merely because he receives a higher commission, she will likely be displeased with the relationship and will not take his recommendation. If the agent is able to show Mary that the recommended product is the best solution for her situation, then she will likely attribute his recommendation to having her best interests in mind and will not be concerned about how it is that he is compensated for his services.

cognitive dissonance
has to do with the doubt that a person has about the wisdom of a recent purchase

It is very common for people to experience some anxiety after the purchase of a product that is very expensive or that will require a long term commitment. Jane and Fred, for example, signed a one year lease on an apartment, committing themselves to payments of $1500 per month. A week later, they are wondering if they should have instead leased a smaller $900 apartment in a more rough part of town; they are not sure if they really can afford this much of a monthly obligation. Dick and Sally, on the other hand, ultimately rented the $900 apartment, and now are wondering if the savings in rent will be offset by noisy and sometimes unsafe conditions in this neighborhood.

Perhaps neither couple would be experiencing this anxiety if their landlords had given them just the smallest of assurances that they had made a good decision. After a close on products that are expensive or that require a long term commitment, the salesperson should provide the prospect with some reasons to be happy with the decision. Allow the car buyer to reinforce her own positive feelings by calling her a week after the purchase to ask how things are going. Call the new life insurance policy holder after two months to see if there are any questions; a lack of questions can only help the buyer to convince himself that he did the right thing.