ANALYZING CONSUMER MARKET & BUSINESS MARKET

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Overview

MARKETBUSINESSCONSUMER

1. Definition of consumer market2. Types of consumers3. Factors influences consumer

behavior4. Model of consumer behavior5. Buying decision process6. Types of buying

1. Definition of business market2. Types of business customers3. Characteristics of buyer4. Types of buying5. System of Buying & Selling6. The buying center7. Buying decision process

These topics are very important because they will prepare you with extensive knowledge on how consumers buy your company’s products as well as how

you could make decision on buying other products for the company’s productions.

CONSUMER MARKET

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TABLE OF CONTENTS

1. Definition of consumer market2. Types of consumers3. Factors influences consumer behavior4. Model of consumer behavior5. Consumer buying decision process

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What is consumer market?

• A consumer market is made up of individuals and households

• A consumer market buys goods and services for personal consumption

• The buyers in the consumers market are end consumers

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How many types of consumers in consumer market?

1. Demographics (male, female, young, old, etc)2. Geographical areas (urban, sub-urban)3. Cultures (Muslim, Buddhist, Hindu, etc)4. Locations (internal, external)5. Life cycle (single, married, divorced)6. Needs hierarchies (Maslow)7. Satisfaction (satisfied, dissatisfied, etc)8. Decision making (routine, limited, extensive)

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What guides consumer to buy in a consumer market?

Model of consumer behavior

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What factors influence consumer behavior in the consumer market?

1. Cultural Factors (nationalities, religions, racial groups, social class and geographic regions)

2. Social Factors (reference Groups, family, roles and status)

3. Personal Factors (age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, lifestyles and values)

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How consumer make buying decision?Family, relatives, friends

Experience

Advertising, WWW, labels, sellers

Public, mass media, opinion leader

Able to satisfy needs

Able to pay

Many benefits

Bundle of attributes

Able to get

Brand decision

Dealer decision

Quantity decision

Timing decision

Pay methods decision

Satisfy-Action-Use-Dispose

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What Hinder Consumer From Buying Our Products in the Consumer Market ?

Attitude of others Buying risks

•Functional Risk•Physical Risk•Financial Risk•Social Risk•Psychological Risk•Time Risk

•Positive attitude•Negative attitude•Passive attitude

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What Hinder Consumer From Buying Our Products in the Consumer Market ?

Functional Risk

Physical Risk

Financial Risk

Social Risk

Psychological Risk

Time Risk

Product failed to function well

Product is dangerous to health and physical

Product is not worth for the price paid

Product resulted in embarrassment from others

Product affect the mental well-being

Product failed lead to opportunity cost to find new product

BUSINESS MARKET

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Business Market

1. Definition of business market2. Types of business customers3. Characteristics of business buyer4. Types of buying in business market5. System of Buying & Selling in business market6. The buying center in business market7. Business buying decision process

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What is business market?

• A business market is made up of companies, organizations, sectors and industries

• A business market buys goods and services to be used to make other goods or to help with the production process

• The buyers in the consumers market are business and organization customers

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What are the types of business customers?

1. Profit oriented2. Non-Profit oriented3. Private4. Government5. Industries

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What are the characteristics of Business Market? What make it differ from consumer market?

1. Fewer producers, larger buyers2. Close supplier-customer relationship3. Professional purchasing (well trained purchasing staff)4. Multiple buying influences (many involvement)5. Multiple sales calls (longer decision, time consuming)6. Derived demand (rely on consumer dd)7. Inelastic demand (not sensitive towards price changes)8. Fluctuating demand (changed as consumer dd changed)9. Geographically concentrated buyers (reduce selling cost)10. Direct purchasing (no middleman for complex goods)

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How business customer buy?

• Straight re-buy is when the purchasing department re-orders on a routine basis

and chooses from suppliers on an approved lists.

• Modified re-buy is when the buyer wants to modify product specifications, prices,

delivery requirements, or other items.

• New Task is when the purchaser buys a product or service for the first

time.

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What is System of Buying & Selling?

• Prime contractors The government would seek bids from prime contractors, who

assembled the package or system. The prime contractor would thus provide a turnkey solution, so-called because the buyer simply had to turn one key to get the job done.

• Second-tier contractors The contractor who was awarded the contract would be responsible for

bidding out and assembling the system’s subcomponents from second-tier contractors.

• Systems contracting A single supplier provides the buyer with his or her entire requirements

of maintenance, repair, and operating (MRO) supplies.

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What is Buying Center? Who are they?• All those individuals and groups who participate in the

purchasing decision-making process

• They share some common goals and share the risks arising from the decisions

1. Initiators.2. Influencers.3. Gatekeepers.4. Deciders.5. Approvers.6. Buyers.7. Users.

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What are the roles of people in The Buying Center?

Initiators

Influencers

Gatekeepers

Deciders

Approvers

Buyers

Users

requests the product

influence the buying decision

have the power to prevent seller information from reaching

members of the buying centre

make the decision of what to purchase

authorize the proposal

have the formal authority to purchase

will use the product

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How Business customer make buying decision?

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Business buying decision process

Problem Recognition

Need Description & Product

Specification

Supplier Search

The buying process begins when someone in the company recognizes a problem or need. The recognition can be started by internal or external motivation.

Company will determine the needed item’s general characteristics and required quantity.

The buyer next tries to identify the most appropriate suppliers through trade directories, contacts with other companies, trade advertisements, and trade shows and the Internet.

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Business buying decision process

E-Procurement

Proposal Solicitation

Potential suppliers may be visited by the company’s agents, who will examine the suppliers’manufacturing facilities and meeting their personnel.

After evaluating each suppliers, the company will end up with a short list of qualified suppliers.

The company invites qualified suppliers to submit proposals.

If the item is complex, the company will require a detailed written proposal from each qualified supplier.

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Business buying decision process

Supplier Selection

Order Routine Specification

Performance Review

Buying centre will specify desired supplierattributes and indicate their relative importance.

To rate and identify the most attractive suppliers, buying centre often use a supplier-evaluationmodel.

Company negotiates the final order, listing thetechnical specifications, the quantity needed, the expected time of delivery, return policies & warranties

Finally the company will contact the end users and ask for their evaluations on the product performance

Rate the supplier on several criteria using a weighted-score method

Aggregate the cost of poor performance to come up with adjusted costs of purchase, including price

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How many types of Buyer – Seller Relationship in business market?

Basic Buying & Selling Relationship

Bare Bones Relationship

Contractual Relationship

Customer Supply/ Competition Relationship

Cooperative Systems Relationship

Collaborative Relationship

Customer is King Relationship

Mutually Adaptive Relationship

January 2010

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Buyer – Seller Relationship

Basic Buying & Selling Relationship

Simple, moderate level of cooperation and information

change

Contractual Relationship

Relationship due to formal contract, low level of trust, low

cooperation and low interaction

Cooperative Systems Relationship

Relationship due to the nature of business and products

nothing more or less

Many relationship, trust and commitment naturally existed

Mutually Adaptive Relationship

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Buyer – Seller RelationshipNew relationship and really

need some adjustments, still new and less cooperation

Bare Bones Relationship

Relationship due to the competition in business. Not really

loyal but have to for the sake of winning the competition.

Customer Supply@ Competition Relationship

True partnership, emotionally attached, mature relationship,

high trust

Collaborative Relationship

Customer is King Relationship

Relationship due to customers needs. Less trust, not really loyal

but for the sake of gaining business from customers demand

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CONCLUSION

• We should have a broad knowledge on how consumers and business responds towards our marketing programs.

• This is very crucial to help marketers in managing the marketing efforts of the organization

• Knowledge about who is consumer, what they buy, who buy, how they buy and what makes they buy is very important to marketers in understanding the consumer behavior as well as the behavior of the business customers.

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Tutorials

1. Describe consumer characteristics which influence buying behavior

2. Identify the major psychological processes which influence consumer responses to the marketing program

3. Describe how consumers make purchasing decisions4. Discuss how marketers analyze consumer decision making.5. Explain three factors that influence consumer behavior.6. A buyer's decisions are influenced by four personal

characteristics. Discuss these characteristics.7. Explain four key psychological processes which influence

consumer responses.

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Tutorials 8. Discuss three of the best-known theories of human motivation.9. Differentiate between Selective Attention, Selective Distortion and

Selective Retention.10.Choose a product that you recently purchased. As a consumer, you go

through five stages of buying-decision process. Explain these stages with example.

11.Consumers may perceive six types of risk in buying and consuming a product. Identify these risks.

12.Marketers use four techniques to try to convert a low-involvement product into one of higher involvement. Discuss these techniques.

13.Examine a set of key core principles of mental accounting.

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14. Describe what is the business market, and how it differs from the consumer market

15. Examine the buying situations that organizational buyers face16. Identify who participates in the business-to-business buying process17. Describe how business buyers make their decisions18. Discuss how companies can build strong relationships with business

customers19. Explain how institutional buyers and government agencies do their

buying.20. Describe ten major business markets characteristics.21. Explain the difference among straight re-buy, modified re-buy and

new task.22. Differentiate the role of prime contractors and second-tier

contractors

Tutorials

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23. There are seven roles in the purchase decision process. Examine these roles.

24. People are not buying “products” they are buying solutions to two problems. Explain what are the problems.

25. Robinson and Associates have identified eight stages in the business buying-decision process and called them buy phases. Describe these stages in detail.

26. Buyer-supplier relationships differ according to four factors. Identify these factors.

27. Buyer-supplier relationships are classified into eight categories. Discuss these categories.

28. Define the Specific investments and Opportunism.

Tutorials