Consumers don’t necessarily go through all the buying stages when they’re considering purchasing product. You have probably thought about many products you want or need but never did much more than that. At other times, you’ve probably looked at dozens of products, compared them, and then decided not to purchase any one of them.
carry a high risk to buyers if they fail, are complex, or have high price tags. A car, a house, and an insurance policy are examples. These items are not purchased often. Buyers don’t engage in routine response behavior when purchasing high-involvement products. Instead, consumers engage in what’s called extended problem solving
The study of when, where, and how people buy things and then dispose of them. considers the many reasons why—personal, situational, psychological, and social—people shop for products, buy and use them, and then dispose of them. Companies spend billions of dollars annually studying what makes consumers “tick.”
The phenomenon is often referred to as “herd behavior.” If people are lined up to buy something, you want to know why. Should you get in line to buy it too? Herd behavior helped drive up the price of houses in the mid-2000s before the prices for them rapidly fell. Unfortunately, herd behavior has also led to the deaths of people.
Market researchers believe people buy products to enhance how they feel about themselves. Your gender also affects what you buy and how you shop. Women shop differently than men. However, there’s some evidence that this is changing. Younger men and women are beginning to shop more alike. People buy different things based on their ages and life stages. A person’s cognitive age is how old he “feels” himself to be. To further understand consumers and connect with them, companies have begun looking more closely at their lifestyles (what they do, how they spend their time, what their priorities and values are, and how they see the world).
They know that once they do have those answers, they will have a much better chance of creating and communicating about products that you and people like you will want to buy. That’s what the study of consumer behavior is all about. Consumer behavior.
Psychologist Abraham Maslow theorized that people have to fulfill their basic needs—like the need for food, water, and sleep—before they can begin fulfilling higher-level needs. Perception is how you interpret the world around you and make sense of it in your brain. To be sure their advertising messages get through to you, companies often resort to repetition. Shocking advertising and subliminal advertising are two other methods. Learning is the process by which consumers change their behavior after they gain information about or experience with a product. Consumers’ attitudes are the “mental positions” people take based on their values and beliefs. Attitudes tend to be enduring and are often difficult for companies to change.
Companies understand that people buy different things based on their ages and life stages. Aging baby boomers are a huge market that companies are trying to tap. Ford and other car companies have created “aging suits” for young employees to wear when they’re designing automobiles. “Designing Cars for the Elderly: A Design Story,” http://www.businessweek.com/globalbiz/content/may2008/gb2008056_154197.htm (accessed April 13, 2012). The suit simulates the restricted mobility and vision people experience as they get older. Car designers can then figure out how to configure the automobiles to better meet the needs of these consumers.
Studying people’s buying habits isn’t just for big companies, though. Even small businesses and entrepreneurs can study the behavior of their customers with great success. For example, by figuring out what zip codes their customers are in, a business might determine where to locate an additional store.
Motivation#N#The inward drive people have to get what they need.#N#is the inward drive we have to get what we need. In the mid-1900s, Abraham Maslow, an American psychologist, developed the hierarchy of needs shown in Figure 3.8 "Maslow’s Hierarchy of Needs".
Have you ever been in a department story and couldn’t find your way out? No, you aren’t necessarily directionally challenged. Marketing professionals take physical factors such as a store’s design and layout into account when they are designing their facilities. Presumably, the longer you wander around a facility, the more you will spend. Grocery stores frequently place bread and milk products on the opposite ends of the stores because people often need both types of products. To buy both, they have to walk around an entire store, which of course, is loaded with other items they might see and purchase.
The primary benefit of a formal process for purchasing is avoiding waste due to fraud, rogue spend, theft, and other financial pitfalls that accompany undocumented, non-optimized buying habits.
But because procurement sits at the heart of the value creation process for your company, formalizing and optimizing your purchasing process is also important to: Creating and efficient and effective buying process for not just direct spend (e.g., raw materials) but indirect spend (e.g., office supplies, IT services, etc.).
It’s often considered interchangeable with the term procurement process, but the purchasing process itself is more confined to actually obtaining goods and services, while procurement refers to the overall framework established to optimize that purchasing for maximum value, savings, and efficiency.
Automatic strategic sourcing as buyers are matched with the best vendor for a given good or service automatically through a closed system that also prevents rogue spend and invoice fraud.
The procurement team describes the need to be met, and works with others to determine how best to do so. For example, a company facing high travel expenses might invest in more fuel-efficient company transportation for its sales staff, or reduce the amount of travel required for remote employees by investing in advanced telecommunication software.
The vendor with the winning bid is then awarded a contract, which is further refined before signing to ensure optimal terms and conditions and to ensure a mutually satisfactory arrangement for both parties.
Potential suppliers submit their bids, and are carefully reviewed based on their performance history, compliance records, and important characteristics such as average lead times, reputation, and price.