Understanding Buyer Behavior
Completion requirements
Read this chapter. The terms "customer" and "consumer" are often mistakenly used interchangeably. The distinction is blurry because different organizations, academics, and governments have varying definitions for both of them. One easy way of distinguishing between the two is to think of the consumer as a potential customer to a firm and the customer as someone that already consumes the goods a specific firm produces. For example, if you regularly purchase shoes from Footlocker, you are a Footlocker customer. But if your friend does not shop at Footlocker, then Footlocker considers him a consumer: a potential customer. Firms often target consumers and existing customers differently.
Buyer Behavior and Exchange
As noted in an earlier chapter, the relationship between the buyer and
the seller exists through
a phenomenon called a market exchange. The exchange process allows the
parties to assess
the relative trade-offs they must make to satisfy their respective
needs and wants. For the
marketer, analysis of these trade-offs is guided by company polices and
objectives. For example, a company may engage in exchanges only when the profit margin is
10% or greater.
The buyer, the other member in the exchange, also has personal policies
and objectives that
guide their responses in an exchange. Unfortunately, buyers seldom write
down their personal policies and objectives. Even more likely, they often don't
understand what prompts
them to behave in a particular manner. This is the mystery or the "black
box" of buyer behavior that makes the exchange process so unpredictable and difficult for
marketers to understand.
Buyers are essential partners in the exchange process. Without them,
exchanges would
stop. They are the focus of successful marketing; their needs and wants
are the reason for
marketing. Without an understanding of buyer behavior, the market
offering cannot possibly be tailored to the demands of potential buyers. When potential
buyers are not satisfied,
exchange falters and the goals of the marketer cannot be met. As long as
buyers have free
choice and competitive offerings from which to choose, they are
ultimately in control of
the marketplace.
A market can be defined as a group of potential buyers with needs and
wants and the
purchasing power to satisfy them. The potential buyers, in commercial
situations, "vote"
(with their dollars) for the market offering that they feel best meets
their needs. An under-
standing of how they arrive at a decision allows the marketer to build
an offering that will
attract buyers. Two of the key questions that a marketer needs to
answer relative to buyer
behavior are:
- How do potential buyers go about making purchase decisions?
- What factors influence their decision process and in what way?
When we use the term "buyer," we are referring to an individual, group,
or organization that engages in market exchange. In fact, there are differences
in the characteristics
of these three entities and how they behave in an exchange. Therefore,
individuals and groups
are traditionally placed in the consumer category, while organization is
the second category. Let us now turn to consumer decision making.