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Buyer Behavior. Categories of Products & Markets. Products Consumer Goods Industrial Goods Markets Consumers (end users) Industrial/Organizational Buyers. Consumer’s Role in Marketing Strategy and Planning. Customer needs and wants are the focus Quality and service are critical

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Categories ofProducts & Markets

  • Products

    • Consumer Goods

    • Industrial Goods

  • Markets

    • Consumers (end users)

    • Industrial/Organizational Buyers


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Consumer’s Role in Marketing Strategy and Planning

  • Customer needs and wants are the focus

  • Quality and service are critical

  • Leading through innovation is important

  • Recall the Customer Orientation??


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Consumer’s Role in Marketing Strategy and Planning

  • Increased domestic and foreign competition

  • More efficient and effective marketing strategies can result

  • Examples

  • Why the heavy focus on the consumer??


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Consumer’s Role in Marketing Strategy and Planning

  • The evidence is mixed

    • Current examples (Saturn vs. Snapple)

    • Evidence from marketing plans

  • Adaptiveness is a key (In Search of Excellence)

  • Sales and satisfaction figures may not be accurate indicators

  • Are companies measuring up?


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Are Consumers Rational?

  • The study of consumer behavior evolved from economics

    • “Rational Man” theory at odds with consumer behavior

    • Numerous factors affect consumer behavior that are not accounted for by economic theories


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Are Consumers Rational?

Let’s Find Out


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RIGHT SIDE

Your about to buy a calculator at Store X for $40. A friend rushes in to tell you that the same calculator is only $20 at Store Y.

Demonstration


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LEFT SIDE

Your about to buy a TV at Store X for $600. A friend rushes in to tell you the same TV is only $580 at Store Y.

RIGHT SIDE

Your about to buy a calculator at Store X for $40. A friend rushes in to tell you that the same calculator is only $20 at Store Y.

Demonstration


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Are Consumers Rational?

  • Copeland’s “rational” and “emotional” motivators

    • Rational/Functional Considerations

    • Emotional/Symbolic Considerations




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Consumer Needs &Wants

  • Needs and wants Motivate consumers

  • Wants are more specific than needs

    • Need transportation

    • Want

  • Do marketers create basic needs?

  • Do marketers create wants?


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FIGURE 5-5 Hierarchy of needs

Slide 5-23


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Consumer Perception

  • Perception is selective


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Advertisers’ Dilemma

  • U.S. consumers exposed to an average of _______ ads per day

  • Advertiser’s trying to change

    • beliefs

    • attitudes

    • behavior

  • Requires breaking through perceptual screens



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BreakingThroughClutter

  • Make it Relevant & Interesting

  • Select Appropriate Appeals

    • Humor/Sex/Fear

  • Select Appropriate Executional Elements


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Consumer Perception

  • Perception is selective

    • Only attend to a fraction of what we are exposed to

  • Perceptions can be biased


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Perceptual Biases

  • Expectations bias perceptions

    • Perception of an experience altered by what we expect to experience

    • Setting proper expectations is critical


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e

k

o

C

Brand Names Create Expectations

  • Coca Cola and New Coke

    • Implications for marketing research

  • Regular Bud Drinkers

  • The “Diet” Label


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Advertising Creates Expectations

  • Ford and Quality

  • Dominos and Delivery

  • Van Heusen and Wrinkles


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When Companies Set Expectations Too High

  • Disconfirmation leads to consumer dissatisfaction

  • Ads may be deemed deceptive by the FTC


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Deceptive Advertising

  • Classic Examples

  • Categories of Deception


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Consumer Attitudes

  • What are attitudes?

    • Enduring evaluations of objects/ideas/people

    • Can be positive, negative or neutral

    • Can be based on feelings and beliefs (affect and cognition)


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Consumer Attitudes

  • Why are attitudes important?

  • Do attitudes always predict behavior?


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Social Influences

  • Reference Groups

  • Word of Mouth

  • Family Influences


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Word of Mouth

  • Exchange of product information and opinions between consumers

  • Consumer reliance on WOM often heavy

  • Content often negative


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Coke’s Experience with WOM and Complaining

  • 12% told 20+ people about Coke’s response

  • If completely satisfied with response, told median of 5 others, and 10% of time increased Coke purchases

  • If dissatisfied with response, told median of 10 people, and about 75% of time reduced purchases or stopped buying


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Family

  • Structure - Changing

  • Roles - Surprising

  • Children - Powerful


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TraditionalFamily Life Cycle

Young Single

Newly Married

Full Nest (I, II & III)

Empty Nest (I & II)

Sole Survivor


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Family Life Cycle

  • Emerging Lifecycle Segments

    • Single parent households

      • ___% of households

      • Mostly ___________

    • Older singles

      • Delay Marriage

      • Divorce

    • Married with no children

    • Unmarried couples


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Family Life Cycle

  • Teens Role in Family Decision Making

    • Large segment (roughly 40 million)

    • $89 Billion Direct/ $200 Billion Total

    • 33% handle major shopping duties

      • Single parent households (25%)

      • Dual income households (75%)

    • Gillette’s Tag vs. Unilever’s Axe

    • Scion (late teen and early twenties)



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FIGURE 5-1 Purchase decision process

Slide 5-7


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Low involvement

Frequently purchased

Inexpensive

Little risk

Little information

High involvement

Infrequently purchased

Expensive

High risk

Much information desired

Routinized Response Behavior

Extensive Problem Solving

Low involvement

High involvement

Levels of Decision Making

Limited Problem Solving

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin


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Information Search

  • Information Search: Seeking Value

  • Internal Search

  • External Search

  • Personal Sources

  • Public Sources

  • Market-Dominated Sources

Slide 5-8


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Consideration Sets

  • Consideration sets are critical

    • Brands actually considered for final purchase

    • Size varies depending on the decision

  • How do companies influence the consideration set?

  • WOM and consideration sets


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Alternative Evaluation

  • Extensive Problem Solving

    • Determine Important Evaluative Criteria

    • Gather Information

    • Make Evaluation


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Brand Evaluation

  • Attribute Importance (Autos)


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Important Features

Brands

Mileage

Power

Styling

Price

Nissan

Saab

Toyota

Brand Evaluation

Buying a Car

5

4

2

4

5

7

9

1

8

6

8

9


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Brand Evaluation

  • Limited Problem Solving

    • Important evaluative criteria already known

    • Information on all but the new brands/models already gathered

    • Evaluation fairly simple comparison


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Brand Evaluation

  • Routinized Response Behavior

    • Inexpensive/low risk/frequently purchased

    • Loyalty response

    • Loyalty vs. inertia


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Organizationalvs.Consumer BuyingBehavior


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Organizational Markets

  • Smaller number of customers

  • Larger purchase orders

  • Derived (vs. Primary) demand

    • Organizational buyers purchase inputs used in creating goods and services for final consumers


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Organizational Buying

  • Buyers technically trained

  • Criteria explicit and needs specialized

  • Multiple buying influences

  • Multiple vendors used to reduce risk

  • Longer decision-making time frame

  • Greater importance of personal selling


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Organizational Buyers

  • Industrial Markets

    • buyers who produce and sell other things

    • Kodak buys chemicals

  • Trade Industries

    • Companies that buy and resell

    • Wholesalers and Retailers

  • Government

    • federal, state, and local

    • e.g., national defense, public safety

  • Institutions

    • Universities, Hospitals


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Organizational Buying Issues

  • Buying Centers

  • Buying Processes

  • Sourcing Decisions

  • Buyer-Seller Relationships


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Buyers

Buying

Center

Users

Influencers

Gatekeepers

Deciders

BuyingCenters


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FIGURE 6-4Types of Organizational Buying

Slide 6-26


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Buyer-Seller

Relationships Have Many Dimensions

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin


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Close Relationships

May Produce

Mutual Benefits

Relationships May

Not Make Sense

  • Reduced flexibility

  • Some purchases are too small or infrequent

  • Higher risk from greater purchase concentration

  • Reliable source of supply

  • Cost reductions

  • Price stability or concessions

  • Reduced uncertainty

  • Joint problem solving

  • Improved quality

Buyer-Seller Relationships: The Good, The Bad, and …

BUT

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin


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Powerful Customer May Control the Relationship

Buyers May Still Use Several Suppliers

Reciprocity May Influence Relationship

Dynamics of Buyer-Seller Relationships

Powerful Customer May Control the Relationship

Buyers May Still Use Several Suppliers

© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin


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The Role of Personal Selling

  • Relationships are ongoing

  • Needs are very specialized

  • Risks are high

  • Education and training are required


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The Role of Personal Selling

Type of Industrial Product

Type of Promotion

Major Capital

Minor Capital

Component Parts

Raw Materials

Trade advertising

Technical literature

Direct mail

Sales promotions

Trade shows

Salespeople

9.7

19.7

5.2

5.4

12.5

47.5

9.3

21.2

5.9

7.6

7.8

48.4

6.4

15.3

3.7

11.8

6.2

56.6

%

%

%

8.3

22.5

2.6

8.3

4.8

53.2

%

Source: D.W. Jackson, J.E. Keith, and R.K. Burdick, “The Relative Importance of Various Promotional Elements in Different Industrial Purchase Situation,” Journal of Advertising, 16 (1987), p. 30.


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