Transcript Module 4 - Valdosta State University

Module 4
Understanding Consumer and
Industrial Markets
Kotler’s Chapters 6 and 7
Chapter 6: Analyzing Consumer
Markets and Buyer Behavior
• Learning Objectives
– 1. Describe and apply the cultural, social, personal, and
psychological factors that influence buying behavior of
consumers.
– 2. Describe and apply the four categories of consumer
buying behavior (complex, dissonance-reducing,
habitual, and variety-seeking buying behavior).
– 3. Describe and apply the stages of the buying process.
Chapter 6/Objective 1: The factors that
influence buying behavior of consumers.
• Cultural: culture, subculture, social class
• Social: reference groups, family, roles and
statuses
• Personal: age/stage in life cycle, occupation
and economic circumstances, lifestyle,
personality and self-concept
• Psychological: motivation, perception,
learning, beliefs and attitudes
Chapter 6/Objective 1: The factors that
influence buying behavior of consumers.
• Culture:
Is what binds a society together. It’s the
values, ideas, perceptions, and experiences we hold in
common. The most fundamental determinant of a person’s
wants and behaviors.
– Subculture: provides more specific identification and
socialization for their members; based on nationality,
ethnicity, religion, age, and geographic region.
– Social Class: relatively homogeneous and enduring
divisions in society, which are hierarchically ordered
and whose members share similar values, interests, and
behavior;based not just on wealth but also on the source
of wealth, education, neighborhood.
Chapter 6/Objective 1: The factors that
influence buying behavior of consumers.
• Social Factors
– Reference Groups: groups that have a direct or
indirect influence on a person’s attitudes or behaviors;
can be membership, secondary, aspirational,or
dissociative. Focus on opinion leaders who can spread
word of mouth.
– Family: the most influential primary reference group
– Roles and Statuses: a role consists of the activities
that a person is expected to perform and each role
carries a status. Need to be aware of status symbols.
Chapter 6/Objective 1: The factors that
influence buying behavior of consumers.
• Personal Factors
– Age/Stage in the Life Cycle - family life cycle
– Occupation and Economic Circumstances - product
choice affected by income, savings and assets, debts,
borrowing power, and attitude toward spending/saving
– Lifestyles - the person’s pattern of living in the world
as expressed in AIO (activities, interests, and opinions)
– Personality (distinguishing psychological
characteristics that lead to consistent and enduring
responses to the environment) and Self Concept
Chapter 6/Objective 1: The factors that
influence buying behavior of consumers.
• Psychological Factors
– Motivation - a need becomes a motive when it is aroused to a
sufficient level of intensity; presses the person to act
– Perception - the process by which an individual selects, organizes,
and interprets information inputs to create a meaningful picture of
the world; selective attention, selective distortion, and selective
retention
– Learning - involves changes in an individual’ls behavior arising
from experience
– Beliefs - a descriptive thought that a person holds about something
– Attitudes - a person’s enduring favorable/unfavorable evaluations,
emotional feelings, and action tendencies toward some object
Chapter 6/Objective 2: The four
categories of consumer buying behavior.
• Complex - high involvement with significant differences
between brands; think-feel-do; usually product is
expensive, bought infrequently, risky and self-expressive.
• Dissonance-Reducing - high involvement with few
differences between brands; usually product is expensive,
infrequent, and risky; consumer wants info to support
decision
• Habitual - low involvement with few differences between
brands; ad repetition creates brand familiarity
• Variety-Seeking - low involvement with significant
differences between brands; brand switching common.
Chapter 6/Objective 3: The 5
Stages of the Buying Process.
• Problem Recognition - recognizes need; marketers need
to identify circumstances that trigger need.
• Information Search - 4 groups of sources: personal (most
effective), commercial, public, experiential. Need to get
brand into awareness set, consideration set, and choice set.
• Evaluation of Alternatives - compare benefits/attributes
• Purchase Decision - purchase intention and buy
• Postpurchase Behavior - postpurchase satisfaction a
function of buyers’ expectation versus product perceived
performance.
Chapter 7: Analyzing Business Markets
and Business Buying Behavior
• Learning Objectives
– 1. Describe how the business market differs
from the consumer market.
– 2. Describe and apply the major influences
(environmental, organizational, interpersonal,
and individual) in the business buying process.
– 3. Describe the purchasing/procurement
process (including purchasing orientation and
the 8 stages in the process).
Chp 7/Obj 1: How the Business Market
differs From the Consumer Market
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Fewer and Larger buyers
Closer supplier-customer relationship
Geographically concentrated buyers (7 key states)
Derived, Inelastic, and Fluctuating Demand
Professional Purchasing w/ Several Buying Influences
Need for Multiple Sales Calls - 4-5 calls to close
Direct Purchasing - buy from manufacturers rather than
intermediaries
– Reciprocity - select suppliers who buy from them
– Leasing - lease instead of buy
Chapter 7/Objective 2: The 4 major
influences in the buying process
• Environmental
– Current and expected economic factors, supply of key
materials; Technological; Political/ legal; Competitive;
Social responsibility - ex. environmental concerns
• Organizational
• Interpersonal
• Individual
Chapter 7/Objective 2: The 4 major
influences in the buying process
• Organizational - objectives, policies, procedures,
organizational structures, and systems
– Trends Include Purchasing-Department Upgrading
(more strategic oriented); Cross-Functional Roles (more
responsibility); Centralized Purchasing (fewer, higher
level buyers); Decentralized Purchasing of Small-Ticket
Items (ex. use of corporate purchasing cards to
empower employees to buy smaller items); Internet
Purchasing; Long-Term Contracts; PurchasingPerformance; Evaluation, and Buyers’ Professional
Development; and Lean Production (ex. JIT).
Chapter 7/Objective 2: The 4 major
influences in the buying process
• Interpersonal - interests, authority, status, empathy,
and persuasiveness
– Recognize several participants that may differ
• Individual - age, income, education, job position,
personality, risk attitudes, and culture
– Recognize individuals have different styles
• Also have to address Cultural Factors in doing
business globally.
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• Business buyers seek to obtain the highest benefit package
(economic, technical, service, and social) in relation to a
market offering’s costs. Incentive higher if benefit>cost.
• Purchasing Orientation
– Buying - executing discrete transactions with suppliers
where the relationships are arms-length and possibly
adversarial; focus short-term and tactical.
– Procurement - seek quality improvements and cost
reductions; more collaborative with smaller # suppliers.
– Supply Management - purchasing becomes strategic
value-added; improve entire value chain from raw
materials to end users.
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• 8 Stages in Process
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1. Problem Recognition
2. General Need Description
3. Product Specification
4. Supplier Search
5. Proposal Solicitation
6. Supplier Selection
7. Order-Routine Specification
8. Performance Review
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• 8 Stages in More Detail
• 1. Problem Recognition
– Recognize a problem due to creating a new
product, break down of equipment,
unsatisfactory material, and opportunity for
lower prices or better quality.
• 2. General Need Description
– Determine general characteristics and required
quantity.
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• 3. Product Specification
– Product Value Analysis - an approach to cost
reduction in which components are carefully
studied to determine if they can be redesigned
or standardized or made by cheaper methods of
production.
• 4. Supplier Search
– Use trade directories, computer search, trade
shows and ads, www.wiznet.net, etc...
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• 5. Proposal Solicitation
– Qualified suppliers invited to submit proposals.
• 6. Supplier Selection - price still key
– Rate suppliers on specific, weighted attributes.
– Companies reducing # of suppliers.
• 7. Order-Routine Specification
– Negotiate final order, list technical specs,
quantity needed, expected time of delivery,
return policies, warranties, etc . . .
Chapter 7/Objective 3: The
Purchasing/Procurement Process
• 8. Performance Review
– Contact end users and ask for their evaluations.
– Rate supplier on several criteria using a
weighted score method.
– Aggregate the cost of poor supplier performace
to come up with adjusted cost of purchase,
including price.
– May result in continuing, modifying, or ending
relationship with supplier.
Module 4: Understanding
Consumer and Industrial Markets
• Chapter 6:
– Consumer Markets and
Buying Behavior
• Chapter 7:
– Business Markets and
Buying Behavior
• Any Questions