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