04. consumer behaviour and business market

THARAKA DIASMBA(USA), BBA(USA), Dip in Mgt, ACIM(UK),

FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia),

MSLIM

� Psychology� Sociology� Anthropology(science of humanity)� Marketing� Marketing� Economics

2AOT - www.tharakadias.com

Because no longer can we take the customer/consumer for granted.

� Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later.

� Only 8% of new product concepts � Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.


All managers must become respect

analysts of consumer motivation and

behaviour

No.

Because cross - cultural styles, habits, tastes, prevents such standardisation.

The more successful a firm has been in the past, the more likely is it to fail in the future.

Because people tend to repeat behaviour for which they have been rewarded.

� “Please leave your values at the desk” “Please leave your values at the desk” “Please leave your values at the desk” “Please leave your values at the desk” ---- Paris hotelParis hotelParis hotelParis hotel� “Drop your trousers here for best results” “Drop your trousers here for best results” “Drop your trousers here for best results” “Drop your trousers here for best results” ----Bangkok laundryBangkok laundryBangkok laundryBangkok laundry

� “The manager has personally passed all water “The manager has personally passed all water “The manager has personally passed all water “The manager has personally passed all water served here” served here” served here” served here” ---- Acapulco restaurantAcapulco restaurantAcapulco restaurantAcapulco restaurantserved here” served here” served here” served here” ---- Acapulco restaurantAcapulco restaurantAcapulco restaurantAcapulco restaurant

� “Because of the impropriety of entertaining guests “Because of the impropriety of entertaining guests “Because of the impropriety of entertaining guests “Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested of the opposite sex in the bedroom, it is suggested of the opposite sex in the bedroom, it is suggested of the opposite sex in the bedroom, it is suggested that the lobby be used for the purpose.” that the lobby be used for the purpose.” that the lobby be used for the purpose.” that the lobby be used for the purpose.” ---- Zurich Zurich Zurich Zurich hotelhotelhotelhotel

� Ladies are requested not to have children in the Ladies are requested not to have children in the Ladies are requested not to have children in the Ladies are requested not to have children in the bar.”bar.”bar.”bar.”---- Norway barNorway barNorway barNorway bar


� “Come alive out of the grave” -Germany

� “Pepsi brings your ancestors back from the grave” - Chinafrom the grave” - China



Consumer

4Ps Marketing

Environment

Buyer

Characteristics

Buyer

Decision Process

Buyer

Decision


4 Ps

Product Price Place Promotion


Marketing

Environment

Economic Technological Political Cultural

Environment


� Cultural� Social� Personal� Psychological� Psychological


� Problem Recognition� Information Search� Evaluation of Alternatives� Purchase Decision� Purchase Decision� Consumption� Postpurchase behaviour


� Product Choice� Brand Choice� Dealer Choice� Purchase Timing� Purchase Timing� Purchase Amount


� Culture� Sub - culture� Social Class


� Reference Groups� Family� Roles and Statuses


� Family Life Cycle� Occupation and Economic circumstances

� Lifestyle� Lifestyle� Personality and self - concept


� Motivation� Perception� Learning� Beliefs and Attitudes� Beliefs and Attitudes


� Initiator� Influencer� Decider� Buyer� Buyer� User


� Complex� Dissonance - Reducing� Habitual� Variety seeking� Variety seeking


� Problem Recognition� Information Search� Evaluation Alternatives� Purchase Decision� Purchase Decision


� Satisfaction� Actions� Use and Disposal



� Characteristics of Business Marketsof Business Markets

� Sales in the business market far exceed sales in consumer markets.


� Characteristics of Business Markets

� Business markets differ from consumer markets in many ways.markets in many ways.

▪ Marketing structure and demand

▪ Nature of the buying unit

▪ Types of decisions and the decision process


� Marketing Structure and

� Compared to consumer markets:� Business markets ▪ have fewer but larger

CharacteristicsCharacteristics

Structure and Demand

� Nature of the Buying Unit

� Types of Decisions and the Decision Process

▪ have fewer but larger customers

� Business customers ▪ are concentrated geographically

� Demand is different▪ Derived demand

▪ Price inelastic

▪ Fluctuates more, and changes more quickly



� Compared to consumer purchases:

Business purchases





� Business purchases involve more buyers in the decision process.

� Purchasing efforts are undertaken by professional buyers.



� In comparison to consumer purchases:� Business buyers face





� Business buyers face more complex buying decisions.

� The buying process is more formalized.

� Buyers and sellers work together closely and build long-term relationships.


Model of Business Model of Business Model of Business Model of Business

Buyer BehaviorBuyer BehaviorBuyer BehaviorBuyer Behavior

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� Major Types of Buying Situations� Straight rebuy

▪ Reordering without ▪ Reordering without modification

� Modified rebuy

▪ Requires modification to prior purchase

� New task

▪ First time purchase


� Systems Selling:

� Buying a packaged solution to a problem from a single seller.from a single seller.

▪ Convenience is a major benefit

� Often a key marketing strategy for businesses seeking to win and hold accounts.


Participants in the Participants in the Participants in the Participants in the Participants in the Participants in the Participants in the Participants in the

Buying Decision ProcessBuying Decision ProcessBuying Decision ProcessBuying Decision ProcessBuying Decision ProcessBuying Decision ProcessBuying Decision ProcessBuying Decision Process

UsersUsersUsersUsersUsersUsersUsersUsers

BuyersBuyersBuyersBuyersBuyersBuyersBuyersBuyers

InfluencersInfluencersInfluencersInfluencersInfluencersInfluencersInfluencersInfluencers

DecidersDecidersDecidersDecidersDecidersDecidersDecidersDeciders

GatekeepersGatekeepersGatekeepersGatekeepersGatekeepersGatekeepersGatekeepersGatekeepers


Emotions also play a role in business buying.

Volvo stresses that the trucks’ benefits will

make “drivers a lot more possessive”.

7- 36

Major Influences on Major Influences on Major Influences on Major Influences on

Business Buyer BehaviorBusiness Buyer BehaviorBusiness Buyer BehaviorBusiness Buyer Behavior

7- 37

�

� Economic trends� Supply conditions� Technological change

Key FactorsKey Factors

�

Environmental� Organizational

� Interpersonal� Individual

� Technological change� Regulatory and political environments

� Competitive developments

� Culture and customs


Environmental

� Objectives� PoliciesProcedures


� Environmental� Organizational� Interpersonal� Individual

Policies� Procedures� Organizational structure

� Systems


� Authority� Status� Empathy



� Empathy� Persuasiveness


� Authority� AgeEducation



Age� Education� Job position� Personality� Risk attitudes


Stages of the Stages of the Stages of the Stages of the

Business Buying ProcessBusiness Buying ProcessBusiness Buying ProcessBusiness Buying Process

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� Eight Stages:

� Stage 1: Problem RecognitionRecognition

� Stage 2: General Need Description

� Stage 3: Product Specification

▪ Value analysis helps to reduce costs


� Eight Stages:

� Stage 4:Supplier Search

� Stage 4:Supplier Search

▪ Supplier development


� Eight Stages:

� Stage 5: Proposal SolicitationSolicitation


� Eight Stages:

� Stage 6: Supplier Selection

Stage 7: Order-Routine � Stage 7: Order-Routine Specification

▪ Blanket contracts are often used for maintenance, repair and operating items.

� Stage 8: Performance Review


� Business Buying on the Internet� E-procurement is growing rapidly.� E-procurement is growing rapidly.

� Reverse auctions account for much of the online purchasing activity.

� E-procurement offers many benefits:

▪ Access to new suppliers

▪ Lower purchasing costs

▪ Quicker order processing and delivery47AOT - www.tharakadias.com

� The Background:Institutional markets are often overlooked in B2B marketing

� The Potential: This

Institutional Markets Institutional Markets Institutional Markets Institutional Markets

� The Potential: This market is somewhat recession-resistant; great target for hard economic times


� Timing is Important:. For example, August is a good month for schools, but often a poor time for other

Institutional Markets Institutional Markets Institutional Markets Institutional Markets

poor time for other institutions due to worker vacations.


� Government Markets

� Most firms that sell to government buyers are not marketing-oriented.buyers are not marketing-oriented.

� Some companies have separate government marketing departments.

� Much of government buying has migrated online.


Thank

you

Thank

you
