1112-Q2-TOPIC 1-CUSTOMERS-20111031 (2)

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CUSTOMERS

1112-Q2-TOPIC 1-MARKETING


http://slidepdf.com/reader/full/1112-q2-topic-1-customers-20111031-2 3/54Marketing Q2 TOPIC 1: CUSTOMERS Theory 33

Markets

Consumer market (Chapter 5 Kotler)

• individuals and households who buy goods and services forpersonal consumption

Business market (Chapter 6 Kotler)

• Organisations that buy goods and services to use in theproduction of other goods and services or for the purpose of reselling or renting them to others at a profit



Learning Goals

• Define the consumer market and construct asimple model of consumer buyer behaviour

• Tell how consumer buyer characteristics influenceconsumer buyer behaviour

• List and understand the major types of buyingdecision behaviour and the stages in the buyer

decision process

• Discuss how consumer decision making varieswith the type of buying decision



Analysing consumer buying behaviour

• What do customers buy?

• Where do they buy?

• When do they buy?

• Why do they buy?

• How do they buy?

• Who buys?



Buyer behaviour

HOW do consumers respond tovarious marketing efforts?



Stimulus-response model of buying behaviour




Buyer characteristics



1. Cultural factors

• Culture

– Culture is the set of basic values, perceptions, wants and

behaviours learned by a member of society from familyand other important institutions.



France Germany Japan Holland USA

Power distance

Individualism

Uncertainty avoidance

Masculinity

Culture

http://www.geert-hofstede.com

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http://www.geert-hofstede.com/






Culture

http://www.worldbusinessculture.com

• Specific information on different business cultures

http://www.worldbusinessculture.com/

http://www.worldbusinessculture.com/



Marketing Q2 TOPIC 1: CUSTOMERS Theory 1212

1. Cultural factors (cont.)

• Subculture

– Nationalities

– Religion

– Racial groups– Geographic regions

HSBC is the first to

offer Islamic financial products




1. Cultural factors (cont.)

• Social class

Source: Class Thompson Hickey








2. Social factors

• Reference groups

–Reference groups serve as direct or indirect points of

comparison or reference in forming a person’s attitudes orbehaviour




2. Social factors (cont.)

• Reference groups

–Opinion leaders are people within a reference group who,

because of special skills, knowledge, personality, or othercharacteristics, exert influence on others




GroupsExtent of group influence on product and brand choice




2. Social factors (cont.)

• Family

–Family of orientation

–Family of procreation

–Decision-making unit: consumers’ buying roles

–Initiator

–Influencer

–Decider

–Buyer

–User

• Roles and status








3. Personal factors

• Buyer’s age and lifecycle stage

Young

– Single

– Married without children

– Married with children

– Divorced with children

Middle-aged

– Single

– Married without children

– Married with children

– Married without dependent children

– Divorced without children– Divorced with children

– Divorced without dependent children

Older

– Older married

– Older unmarried




3. Personal factors (cont.)

• Occupation

• Economic situation

• Lifestyle

–Activities

– Interests

–Opinions

–Demographics

• Personality and self-concept




Personality

Personality is a person’s distinguishing psychological characteristics

that lead to relatively consistent and lasting responses to his or her

own environment.

Brand personality:

a set of human characteristics related to a brand








4. Psychological factors

• Motivation

Freud:

suggested that a person’s buying decisions are affected bysubconscious motives that even the buyer may not understand.

Maslow:

Human needs are arranged in a hierarchy from the most

pressing at the bottom to the least pressing at the top.




Maslow’s theory’s of motivation




4. Psychological factors (cont.)

• Perception

The process by which people select, organise and interpret

information to form a meaningful picture of the world

• Three perceptual processes:

–Selective attention

–Selective distortion

–Selective retention




Perception




4. Psychological factors (cont.)

• Learning

changes in an individual’s behaviour arising from experience

• Beliefs and attitudes– A belief is a descriptive thought that a person has about

something

– An attitude describes a person’s relatively consistentfavorable or unfavorable evaluations, feelings, andtendencies toward an object or idea




BeliefsConsumer market beliefs

Products and brands

–The best brands are the ones that sell best

–Keep clear of products new to the market until “bugs” have

been ironed out

Store

–You can tell a store by its window display

– Larger stores offer better prices than smaller ones

–Specialty stores are great to learn about product options,

but it is best to buy from a discount store

–A store offering good value on some of its items probablyoffers it on all its items




BeliefsConsumer market beliefs

Price

–Higher prices often mean higher quality

–Sales are designed to remove poorly selling products

–Prices will fall soon after the product is launched

Promotion

–The harder the sell the poorer the quality

–Free gifts to products mean the product may not be up to much

Packaging

–Big containers are always cheaper per unit than smaller sizes

–Environmentally friendly packaging adds cost to the product




Stimulus-response model of

buying behaviour





How consumers make buying

decisions…

• Types of decisions that consumers face

• Main steps in the buyer decision process




Determinants of the extent of

problem solving

Price

Perceived risk

Purchasefrequency

Self-expressive

Level of involvement

Differentiation andnumber of

alternatives

Time pressure

Extent of

problem solving




Types of buying behaviour

Complex

buyingbehavior

Variety-

seekingbehavior

Dissonance-

reducingbuying

behavior

Habitualbuying

behavior

HighInvolvement

LowInvolvement

Significant

differencesbetween

brands

Few

differencesbetween

brands




What is complex buying

behaviour?

Complex buying behaviour is consumer buying

behaviour in situations characterised by high consumer

involvement in a purchase and significant perceived

differences among brands.




What is dissonance-reducing

buying behaviour?

Dissonance-reducing buying behaviour is consumer

behaviour in situations characterised by high involvement

but few perceived differences among brands.




What is habitual buying behaviour?

Habitual buying behaviour is consumer behaviour in

situations characterised by low consumer involvement and

few perceived brand differences.




What is variety-seeking buying

behaviour?

Variety-seeking buying behaviour is consumer

behaviour in situations characterised by low consumer

involvement, but significant perceived brand differences.




Buyer decision process

Needrecognition

Information

search

Evaluation ofalternatives

Purchasedecision

Postpurchasebehaviour

Purchase intention

Attitude of others

Unexpectedsituational factors




Buyer decision process

Needrecognition

Information

search

Evaluation ofalternatives

Purchasedecision

Postpurchasebehaviour

Encourage consumers to see that existing state does not

equal desired state

Provide information when and where consumers are likely

to search

Understand the criteria consumers use in comparing

between brands and communicate own brand

superiority

Understand choice heuristics (beliefs) used

by consumers and provide communicationthat encourages brand decision

Encourage accurate consumer

expectations




Markets

Consumer market (Chapter 5 Kotler)

• individuals and households who buy goods and services forpersonal consumption

Business market (Chapter 6 Kotler)

• Organisations that buy goods and services to use in theproduction of other goods and services or for the purpose of reselling or renting them to others at a profit




Learning Goals

• Define the business market and explain howbusiness markets differ from consumer markets

• Identify the major factors that influence business

buyer behaviour

• List and define the steps in the business buyingdecision process

• Compare the institutional and governmentmarkets and explain how institutional andgovernment buyers make their buying decisions




Business market

1. Business market

– business buyers

2. Institutional market

– includes schools, hospitals, nursing homes, prisons and other institutions providing care

3. Government market– includes national and local units that purchase

or rent goods to carry out government functions.




Characteristics of business markets

Market structure and demand–Fewer but larger buyers–Geographically concentrated

–Derived from final consumer demand –More inelastic –More fluctuations

Nature of buying unit–More buyers in process

–More professional purchasing effort

Types of decisions and the decision process –More complex and formalised buying decisions–Based on long-term relationships




Model of business buyer behaviour

Theenvironment

The

buying

organisation

Buyerresponse

• Marketing stimuli

• Other stimuli

• Economic

• Technological

• Political

• Cultural

• Competitive

• The buying centre

• Buying decision process

• Product choice

• Supplier choice

• Order quantities

• Delivery terms and times

• Service terms

• Payment




The buying centre

All the individuals and units that play a role in thebusiness purchase decision-making process

Five roles in the purchase decision process:• Users• Influencers• Buyers• Deciders

• Gatekeepers




Major influences on business buyers

• Environmental factors

• Organisational factors

• Interpersonal factors

• Individual factors




The business buying process

The business buying process is the decision-making

process by which businesses establish the need

for purchased products and services, and

identify, evaluate, and choose among alternative

brands and suppliers.




Stages of the business buying process

Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Supplier selection

Order-routine specification

Performance review




E-procurement: buying on the internet

Benefits:

• Gives buyers access to new suppliers

• Lowers purchasing costs

• Hastens order processing and delivery

• Frees purchasing people to focus on strategicissues

Acme Whistles




Major types of buying situations

Modified Rebuy

New Task Buying

Straight RebuyExtranet; e-procurement I n

v o l v e d

D e c i s i o n M

a k i n g




Differences B2B and B2C marketing

• purchase goods and services thatmeet specific business needs

• need emphasis on economicbenefits

• lengthy purchasing policies andprocesses

• buy large quantities and buyinfrequently

• want a customized product package

• purchase goods & services to meetindividual or family needs

• need emphasis on psychologicalbenefits

• buy on impulse or with minimalprocesses

• purchase as individuals or as a familyunit

• are content with a standardized productpackage

B2B customers often / usually Consumer customers often / usually




• experience minor irritation if supplyfails

• find switching to another suppliereasy

• accept the stated price

• purchase from intermediaries

• emphasis on mass media

• experience major problems if supply fails

• find switching to another supplierdifficult

• negotiate on price

• purchase direct from suppliers

• emphasis on personal selling

Differences B2B and B2C marketing

B2B customers often / usually Consumer customers often / usually



Questions:

1. How do the market structure and demand of the businessmarkets for Michelin tyres sold to car makers differ fromthose selling Michelin tyres to final consumers?

2. Discuss several ways in which a straight rebuy differs from anew-task situation.

3. How does the business buying process differ from theconsumer buying process?

4. Suppose that you own a small printing firm and have theopportunity to bid on a government contract that couldbring a considerable amount of new business to yourcompany. List 3 advantages and 3 disadvantages of workingin a contract situation with the government.

Documents

1112-Q2-TOPIC 1-CUSTOMERS-20111031 (2)