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Chapter SixBusiness Markets and Business Buying BehaviorBusiness MarketsBusiness buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in production of other products and services that are sold, rented, or supplied to others. Also included are retailing and wholesaling firms that acquire goods to resell or rent to others for profit.Business buying process is the process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brandsBusiness MarketsBusiness MarketsMore decision participantsMore professional purchasing effortBusiness Buyer BehaviorStraight rebuy is a routine purchase decision such as reorder without any modificationModified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliersNew task is a purchase decision that requires thorough research such as a new productMajor Types of Buying SituationsBusiness Buyer BehaviorSystems selling involves the purchase of a packaged solution from a single sellerTwo-step process of selling:Interlocking productsSystem of production, inventory control, distribution, and other services to meet the buyer’s need for a smooth-running operationMajor Types of Buying SituationsBusiness Buyer BehaviorBuying center is all of the individuals and units that participate in the business decision-making processUsersInfluencersBuyersDecidersGatekeepersParticipants in the Business Buying ProcessBusiness Buyer BehaviorUsers are those that will use the product or serviceInfluencers help define specifications and provide information for evaluating alternativesBuyers have formal authority to select the supplier and arrange terms of purchaseDeciders have formal or informal power to select and approve final suppliersGatekeepers control the flow of informationParticipants in the Business Buying ProcessBusiness Buyer BehaviorProblem recognition occurs when someone in the company recognizes a problem or needInternal stimuliNeed for new product or production equipmentExternal stimuliIdea from a trade show or advertisingThe Buying ProcessBusiness Buyer BehaviorGeneral need description describes the characteristics and quantity of the needed itemProduct specification describes the technical criteriaThe Buying ProcessBusiness Buyer BehaviorSupplier search involves compiling a list of qualified suppliersProposal solicitation is the process of requesting proposals from qualified suppliersThe Buying ProcessBusiness Buyer BehaviorSupplier selection is the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditionsOrder-routine specifications is the final order with the chosen supplier and lists all of the specifications and terms of the purchaseThe Buying ProcessBusiness Buyer BehaviorPerformance review involves a critique of supplier performance to the purchase termsThe Buying ProcessBusiness Buyer BehaviorOnline purchasingCompany-buying sitesExtranetsE-ProcurementBusiness Buyer BehaviorAdvantagesAccess to new suppliersLowers costsSpeeds order processing and deliveryShares informationSalesService and supportDisadvantagesCan erode relationships as buyers search for new suppliersSecurityE-ProcurementInstitutional and Government MarketsInstitutional markets consist of hospitals, nursing homes, and prisons that provide goods and services to people in their careCharacteristicsLow budgets“Captive” audienceInstitutional and Government MarketsGovernment markets tend to favor domestic suppliers and require suppliers to submit bids and normally award to the lowest bidderCarefully monitored
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5 - 2
Definitions
• Consumer buyer behavior refers to the buying behavior of final consumers – individuals and households who buy goods and services for personal consumption
• All of these final consumers combine to make up the consumer market
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Characteristics Affecting Consumer Behavior
Culture•Forms a person’s wants and behavior
Subculture•Groups with shared value systems
Social Class•Society’s divisions who share values, interests and behaviors
CulturalSocialPersonalPsychological
Key FactorsKey Factors
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Characteristics Affecting Consumer Behavior
Groups
• Reference• Aspirational
• Opinion Leaders– Buzz marketing
Family• Many influencers
Roles and Status
CulturalSocialPersonalPsychological
Key FactorsKey Factors
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Characteristics Affecting Consumer Behavior
Age and life cycle Occupation Economic situation Lifestyle
•Activities, interests and opinions
•Lifestyle segmentation Personality and self-
concept
CulturalSocialPersonalPsychological
Key FactorsKey Factors
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Characteristics Affecting Consumer
BehaviorMotivation
Needs provide motives Motivation research Maslow’s hierarchy of needs
Perception Selective attention, selective
distortion, selective retention
Learning cues, responses and
reinforcement
Beliefs and attitudes
Cultural Social Personal Psychological
Key FactorsKey Factors
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The Buyer Decision Process
Need recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior
Needs can be triggered by:
Internal stimuli• Normal needs
become strong enough to drive behavior
External stimuli• Advertisements• Friends of friends
Process Process Stages Stages
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The Buyer Decision Process
Need recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior
• Consumers exhibit heightened attention or actively search for information.
• Sources of information: Personal Commercial Public Experiential
• Word-of-mouth
Process Process Stages Stages
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The Buyer Decision Process
Need recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior
• Evaluation procedure depends on the consumer and the buying situation.
• Most buyers evaluate multiple attributes, each of which is weighted differently.
• At the end of the evaluation stage, purchase intentions are formed.
Process Process Stages Stages
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The Buyer Decision Process
Need recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior
• Two factors intercede between purchase intentions and the actual decision: Attitudes of others Unexpected situational
factors
Process Process Stages Stages
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The Buyer Decision Process
Need recognitionInformation searchEvaluation of alternativesPurchase decisionPostpurchase behavior
• Satisfaction is important: Delighted consumers
engage in positive word-of-mouth.
Unhappy customers tell on average 11 other people.
It costs more to attract a new customer than it does to retain an existing customer.
• Cognitive dissonance is common
Process Process Stages Stages
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Buyer Decision Process for New Products
New Products Good, service or idea that is
perceived by customers as new.
Stages in the Adoption Process Marketers should help
consumers move through these stages.
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Stages in the Adoption Process
Buyer Decision Process for New Products
AwarenessEvaluation
InterestTrial
Adoption
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Buyer Decision Process for New Products
Individual Differences in Innovativeness
Consumers can be classified into five adopter categories, each of which behaves differently toward new products.
Product Characteristics and Adoption
Five product characteristics influence the adoption rate.