Consumer Behaviour Consumer Behaviour
Concepts and Concepts and
Applications Applications
Not a simple picture !!!
Not a simple picture !!!
To consider To consider
influences on consumer buying processesinfluences on consumer buying processes
problem-solving: problem-solving: pleasure seeking (irrational) vs. pleasure seeking (irrational) vs.
rational views of buying rational views of buying
how we construe our buying/spending: perceptions, how we construe our buying/spending: perceptions, attitudes & motivations
attitudes & motivations
pre-exchange, in the exchange itself & post exchangepre-exchange, in the exchange itself & post exchange
categories of influence: categories of influence:
environmental and culturalenvironmental and cultural
individual and reference groupsindividual and reference groups
Insights from learning theory Insights from learning theory
B2C and B2B organisational buying behavioursB2C and B2B organisational buying behaviours
marketing strategy & communications design marketing strategy & communications design implications
implications
333 3
Obviously Obviously
Individual customers & organisational Individual customers & organisational customers buy goods & services
customers buy goods & services
They are stimulated & prompted to buyThey are stimulated & prompted to buy
Marketers Marketers
are interested in their decision behaviour are interested in their decision behaviour
try to stimulate & influence this behaviour to try to stimulate & influence this behaviour to get better responses from the customer
get better responses from the customer
Marketers, actors & roles in buying Marketers, actors & roles in buying
marketing concept …"satisfy marketing concept …"satisfy
consumer needs for profit/value"
consumer needs for profit/value"
so....
so....
to segment, target & construct our to segment, target & construct our marketing mix & promotions well, marketing mix & promotions well,
we must understand consumers &
we must understand consumers &
their behaviour their behaviour
we can study actual purchases we can study actual purchases then find ways to encourage them then find ways to encourage them
to consider buying & then buy !!!
to consider buying & then buy !!!
buying may involve buying may involve
many stepsmany steps
many peoplemany people
the actual purchase is but one part the actual purchase is but one part of the process
of the process
Actors and roles
the same person can play multiple roles
•consumers
•opinion formers
•marketers
•public policy actors Actors and roles
the same person can play multiple roles
•consumers
•opinion formers
•marketers
•public policy actors
Who is important in the buying decision?
What do they buy & how much ? When do they buy & where ? How do they buy?
What choice criteria do they use?
How do they respond to the efforts we use?
Who is important in the buying decision?
What do they buy & how much ? When do they buy & where ? How do they buy?
What choice criteria do they use?
How do they respond to the efforts we use?
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Buyer Behaviour Model Buyer Behaviour Model
55
buyer’s black
box
buyer’s black
box
Needs - wants, stimuli Product, price, place, promotion etc
Environmental (PEST) factors
Buyer
responses Choices of
•product
•brand
•dealer
•timing
•price
Buy more, less, stay loyal etc
Information search Information search
How we buy (a rational view) How we buy (a rational view)
Need recognition, problem-awarenessNeed recognition, problem-awareness
Evaluate alternatives Evaluate alternatives Information search
Information search
BuyBuy
Post-purchase evaluation Post-purchase
evaluation Shape desire, want Shape desire, want
Evaluate alternatives (against evoked set) Evaluate alternatives (against evoked set) Window-shop – simmering interests
Window-shop – simmering interests
BuyBuy
Post-purchase evaluation Post-purchase
evaluation
• functional
• emotional ?
• current vs desired situation
• relative importance
• need inhibitors
• are they aware of need ?
• can we mediate need inhibitors?
• can we stimulate awareness &
action
• internal search (memory)
• external search (personal sources, commercial sources
• third party reports (e.g. Which)
• personal observation/testing
Evoked set
Operant (or instrumental) conditioning Operant (or instrumental) conditioning
Learning based upon the consequences of Learning based upon the consequences of behaviour
behaviour
the chance of a specific behaviour goes the chance of a specific behaviour goes or or thru +ve or -ve reinforcement each time the
thru +ve or -ve reinforcement each time the behaviour happens
behaviour happens
we associate the pleasure or displeasure of the we associate the pleasure or displeasure of the reinforcement with the behaviour
reinforcement with the behaviour
Consequences of responding that increase Consequences of responding that increase behaviour are “
behaviour are “reinforcers”reinforcers”
Marketers want to know the “reinforcers”Marketers want to know the “reinforcers”
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Responses are reinforced, punished, Responses are reinforced, punished,
or extinguished 1 or extinguished 1
Reinforcement is … Reinforcement is …
a consequence that a consequence that more frequent behaviour more frequent behaviour Positive reinforcement
Positive reinforcement
a behaviour (response) a behaviour (response) a favourable stimulus a favourable stimulus (commonly pleasant)
(commonly pleasant) increasing the frequency increasing the frequency of the behaviour
of the behaviour
Negative reinforcement Negative reinforcement
a behaviour (response) a behaviour (response) lessening of an aversive lessening of an aversive stimulus (commonly unpleasant) increasing that
stimulus (commonly unpleasant) increasing that behaviours frequency
behaviours frequency
Responses are reinforced, punished, Responses are reinforced, punished,
or extinguished 2 or extinguished 2
Punishment Punishment
a consequence that causes a behaviour to occur less a consequence that causes a behaviour to occur less often
often
Positive punishment ("P. by contingent stimulation") Positive punishment ("P. by contingent stimulation")
a behaviour (response) a behaviour (response) an aversive stimulus an aversive stimulus a a decrease in the behaviour.
decrease in the behaviour.
Negative punishment ("P. by contingent withdrawal") Negative punishment ("P. by contingent withdrawal")
a behaviour (response) a behaviour (response) removal of a favourable removal of a favourable
stimulus e.g. taking away a naughty child's toy, resulting stimulus e.g. taking away a naughty child's toy, resulting
in less of that behaviour in less of that behaviour
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Responses are reinforced, Responses are reinforced, punished, or extinguished 3 punished, or extinguished 3
Avoidance learning Avoidance learning
a behaviour r a behaviour r ending of an aversive ending of an aversive
stimulus e.g. we no longer contact someone &
stimulus e.g. we no longer contact someone &
so avoid their unpleasantness.
so avoid their unpleasantness.
Extinction Extinction
a behaviour (response) that had previously been a behaviour (response) that had previously been reinforced is no longer effective
reinforced is no longer effective
the lack of any consequence following a the lack of any consequence following a behaviour
behaviour
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Roles in the decision process Roles in the decision process
after
after Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson
each role can be acted by parent, children or other each role can be acted by parent, children or other members of the buying centre.
members of the buying centre.
Each actor may display multiple roles when buying
•a toy purchase
•a house
•a washing machine
•an armoured vehicle
•a sound system
•computer software Each actor may display multiple roles when buying
•a toy purchase
•a house
•a washing machine
•an armoured vehicle
•a sound system
•computer software
Infants, teenagers, working women, husbands?
Infants, teenagers, working women, husbands?
Influencing Strategies 1.expert influencing 2.subtle (incl. use of rewards
3.emotional 4.combination
Influencing Strategies 1.expert influencing 2.subtle (incl. use of rewards
3.emotional 4.combination
Who is
initiator
influencer
decider
buyer
user
What is the Relative Influence of Husbands What is the Relative Influence of Husbands
vs. Wives in Decision Making?
vs. Wives in Decision Making?
How is this changing?
131313 13
Influences on Consumer Influences on Consumer
Behaviour Behaviour
Cultural Cultural
broadest & deepest influencebroadest & deepest influence
cultures & subculturecultures & subculture
social classessocial classes
Social Social
FamilyFamily
Social roles and status (multiple)Social roles and status (multiple)
Reference groupsReference groups
Membership - primary vs. secondary Membership - primary vs. secondary
Aspirational vs. dissociativeAspirational vs. dissociative
Personal Personal
AgeAge
Life cycle stageLife cycle stage
OccupationOccupation
Economic circumstancesEconomic circumstances
LifestyleLifestyle
PersonalityPersonality
Self-conceptSelf-concept
Psychological Psychological
MotivationMotivation
PerceptionPerception
LearningLearning
BeliefsBeliefs
AttitudesAttitudes
Personal influences Personal influences
Perception Perception
"mind" processes - selection, association, "mind" processes - selection, association, organisation & interpretation. We
organisation & interpretation. We
only note only note somesome things (selective) i.e. things (selective) i.e. what what grabs attention + distortion & retention
grabs attention + distortion & retention
associate & categorise information into associate & categorise information into meaningful wholes
meaningful wholes
interpret/make inferencesinterpret/make inferences
information framing e.g. information framing e.g.
good news or bad news first ? good news or bad news first ?
accentuate the positives, eliminate the negativesaccentuate the positives, eliminate the negatives
Learning Learning
classical & operant conditioningclassical & operant conditioning
cognitive learningcognitive learning
by roteby rote
vicarious (from others)vicarious (from others)
reasoningreasoning
what motivates uswhat motivates us
what we believe inwhat we believe in
real knowledge, opinion or real knowledge, opinion or faith
faith
Our attitudes Our attitudes
relatively consistent relatively consistent evaluations, feelings, evaluations, feelings,
tendencies towards something tendencies towards something
Three componentsThree components
cognitive (belief), cognitive (belief),
affective (feeling), affective (feeling),
conative (behavioural)conative (behavioural)
personalitypersonality
self-concept, lifestyle & self-concept, lifestyle &
life cycle stages life cycle stages
1515
Perceptual, conceptual & related capacities Perceptual, conceptual & related capacities
Perceptual -
Perceptual - Sensing, measuring, judgingSensing, measuring, judging
Colour, sound, texture, smell. Interpreting smells, noises, signalsColour, sound, texture, smell. Interpreting smells, noises, signals
Monitoring sounds, vibrations, data, informationMonitoring sounds, vibrations, data, information
Frames of reference – what is your “vantage point”Frames of reference – what is your “vantage point”
Conceptual Conceptual
associating, abstracting, formulating, calculating, inferring associating, abstracting, formulating, calculating, inferring
understanding processes in the abstractunderstanding processes in the abstract
deriving ideas & predicting from associated, comparative informationderiving ideas & predicting from associated, comparative information
depends on knowledge and know-how (range & level)depends on knowledge and know-how (range & level)
dealing with symbolic information + its associationsdealing with symbolic information + its associations
Relating -
Relating - Ego + alter-ego oriented: Ego + alter-ego oriented:
need for achievement, power, affiliationneed for achievement, power, affiliation
sensitivity & empathy, identification & association, objective-subjective, sensitivity & empathy, identification & association, objective-subjective, attitudes & values
attitudes & values
Physical Physical
Storage, access, processing & transmission capacity, security, privacyStorage, access, processing & transmission capacity, security, privacy
Concepts in socio-cultural Concepts in socio-cultural
examination examination
Culture Culture
a socially constructed complex of a socially constructed complex of values, ideas, attitudes, institutions, values, ideas, attitudes, institutions, meanings & symbols that shape and meanings & symbols that shape and are shaped by behaviour & maybe are shaped by behaviour & maybe passed on thru generations
passed on thru generations Social Class
Social Class
relatively permanent divisions in a relatively permanent divisions in a
society into which individuals or families society into which individuals or families may be categorized
may be categorized
based on perceived status & prestige.based on perceived status & prestige.
Sub- or Micro-culture Sub- or Micro-culture
a sub-group with its own distinguishing a sub-group with its own distinguishing modes of behaviour.
modes of behaviour.
RoleRole
Behaviours, rights, duties expected of Behaviours, rights, duties expected of an individual in a group by other
an individual in a group by other members
members
Reference groups Reference groups
structures & standards structures & standards influence behaviour.
influence behaviour.
Membership Membership
groups we actually belong togroups we actually belong to Aspirational
Aspirational
We wish to associate with We wish to associate with this group.
this group.
Disassociative Disassociative
We do not want to be We do not want to be identified with this group.
identified with this group.
Power studies Power studies
how roles, groups & norms how roles, groups & norms influence individual
influence individual behaviour.
behaviour.
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Opinion formers Opinion formers
Trendsetters Trendsetters
influential people in a group who influential people in a group who
purchase new products earlypurchase new products early
serve as information sources for othersserve as information sources for others
The MediaThe Media
TV, newspapers, magazines, Internet communicationTV, newspapers, magazines, Internet communication
commentatorscommentators
the media need "stories"the media need "stories"
Sellers & MarketersSellers & Marketers
"seeding" the media. Pay media producers for product "seeding" the media. Pay media producers for product placement in "publication channels"
placement in "publication channels"
From a Fashion house to PrimarkFrom a Fashion house to Primark
Advertising, promotions & incentivesAdvertising, promotions & incentives
Word-of-mouth - viralWord-of-mouth - viral
Personality & self concept Personality & self concept
extroversion-introversionextroversion-introversion
self-confidence, dominanceself-confidence, dominance
sociabilitysociability
autonomyautonomy
defensivenessdefensiveness
adaptabilityadaptability
aggressivenessaggressiveness
Towards a brand personality:
Towards a brand personality:
““the brand & Me”the brand & Me”
sinceritysincerity
down to earth, honest, wholesome, down to earth, honest, wholesome, cheerful
cheerful
excitementexcitement
daring, spirited, imaginative, up-to-daring, spirited, imaginative, up-to- datedate
competencecompetence
reliable, intelligent, successfulreliable, intelligent, successful
sophisticationsophistication
higher class, charminghigher class, charming
ruggednessruggedness
outdoors, toughoutdoors, tough
e.g. Take care of pennies & £ will e.g. Take care of pennies & £ will take care of themselves
take care of themselves Levi Jeans ?
Swaferga ?
Branston baked beans?
Chicken jalfrazi ? Top Gear ?
Yesterday Channel ?
Lands End?
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Components of Attitude Components of Attitude
Attitude
(overall orientation toward object or idea) Cognitive
(knowledge & beliefs about a subject/object)
Affective
(overall feelings or emotive reactions)
Behavioural
(how we tend to behave)
A person’s enduring favourable or
unfavourable evaluation of some object or idea
Choice criteria Choice criteria
attributes & variables a attributes & variables a consumer uses when consumer uses when evaluating products &
evaluating products &
services services
different members of different members of buying centre obviously buying centre obviously may use different criteria may use different criteria
e.g. a teenager or a WAG e.g. a teenager or a WAG (self-image), a parent (for (self-image), a parent (for
the baby), an OAP (price the baby), an OAP (price
or risk reduction) or risk reduction)
Social status social belonging fashion Personal
self-image risk reduction morals
emotion Social
status social belonging fashion Personal
self-image risk reduction morals
emotion Technical
reliability durability performance style/looks comfort delivery
convenience taste
Economic price, VfM running costs residual
value
life cycle costs
Technical reliability durability performance style/looks comfort delivery
convenience taste
Economic price, VfM running costs residual
value
life cycle costs
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Consumer Problem-Solving Consumer Problem-Solving
Categories Categories
Routinised (habitual) Routinised (habitual)
repeat buys. repeat buys.
Advertising may influence a change – also Advertising may influence a change – also
promotions (2 for 1), branding to keep product in promotions (2 for 1), branding to keep product in
customer’s mind customer’s mind
Limited problem solving (LPS)Limited problem solving (LPS)
buyer has some experience, may check prices buyer has some experience, may check prices etc. Buyers can advertise to stimulate & compare etc. Buyers can advertise to stimulate & compare
or reduce risk of brand switching or reduce risk of brand switching
Extended problem solving (EPS)Extended problem solving (EPS)
Extended problem-solving Extended problem-solving
Research all choice Research all choice alternatives + examine alternatives + examine
solutions solutions
alternatives are alternatives are differentiated &
differentiated &
numerous numerous
high deliberation & high deliberation &
involvement time involvement time
personally relevant personally relevant (risks)
(risks)
high potential for high potential for
cognitive dissonance cognitive dissonance
Research all choice Research all choice alternatives + examine alternatives + examine
solutions solutions
alternatives are alternatives are differentiated &
differentiated &
numerous numerous
high deliberation & high deliberation &
involvement time involvement time
personally relevant personally relevant (risks)
(risks)
high potential for high potential for
cognitive dissonance cognitive dissonance
self-image
risks social factors
2525
Cigarette advertising
Cigarette advertising
Cognitive dissonance Cognitive dissonance
(after Festinger) (after Festinger)
discomfort when facing logical inconsistencies in our thinking discomfort when facing logical inconsistencies in our thinking (cognitions) e.g. a belief in animal rights may be seen as
(cognitions) e.g. a belief in animal rights may be seen as inconsistent with eating meat or wearing fur.
inconsistent with eating meat or wearing fur.
We may feel anxiety assoc. with bad decisions: guilt, shame, We may feel anxiety assoc. with bad decisions: guilt, shame, anger, embarrassment, stress or other. This can lead to
anger, embarrassment, stress or other. This can lead to
rationalisation: justifications to support our choices or change rationalisation: justifications to support our choices or change
in attitudes, beliefs & behaviours.
in attitudes, beliefs & behaviours.
When ideas are consistent … harmony or consonance.When ideas are consistent … harmony or consonance.
If cognitions are unrelated, they are "irrelevant" not dissonant.If cognitions are unrelated, they are "irrelevant" not dissonant.
Aesop's "The Fox and the Grapes"
Aesop's "The Fox and the Grapes"
A fox sees some tasty, grapes high on the A fox sees some tasty, grapes high on the
vine but can't think how to reach them. He vine but can't think how to reach them. He
concludes that the grapes are probably not concludes that the grapes are probably not
worth eating anyway (not yet ripe, too worth eating anyway (not yet ripe, too
sour).
sour).
Nb. dissonance in the desire for something Nb. dissonance in the desire for something
unattainable & so the fox irrationally unattainable & so the fox irrationally
decides that the "thing" must be flawed decides that the "thing" must be flawed
(Sour Grapes).
(Sour Grapes).
2727
Smoking Smoking
we know that cigarettes cause lung cancerwe know that cigarettes cause lung cancer
we want to live a long and healthy life we want to live a long and healthy life
we can we can
quit smoking & reduce the tension between the contradictory quit smoking & reduce the tension between the contradictory ideas or
ideas or
deny conclusions about lung cancer or justify our smokingdeny conclusions about lung cancer or justify our smoking
“Only a few smokers become ill". "It only happens to very “Only a few smokers become ill". "It only happens to very heavy smokers“. "If smoking does not kill me, something heavy smokers“. "If smoking does not kill me, something else will." "I am a smart, reasonable person who makes else will." "I am a smart, reasonable person who makes good decisions." Easier to make excuses than to change good decisions." Easier to make excuses than to change behaviour. Humans are rationalizing and not always
behaviour. Humans are rationalizing and not always rational.
rational.
2929
Social classes Social classes
Upper UppersUpper Uppers
Lower UppersLower Uppers
Upper MiddlesUpper Middles
Middle ClassMiddle Class
Working ClassWorking Class
Upper LowersUpper Lowers
Lower LowersLower Lowers
Chavs
• slang (UK) for a subcultural stereotype
• Aspirants who want to be in a "class"
above their actual class.
• spend on fashion for upward social mobility.
• fixated on fashion 'designer' clothing, handbags, gold jewelery e.g.
Burberry,
• trying to adopt lifestyle of admired, referent class but not seen as
successful.
• considered to be in poor taste, ignorant,
• labelled as "trying too hard, not worthy enough".
Chavs
• slang (UK) for a subcultural stereotype
• Aspirants who want to be in a "class"
above their actual class.
• spend on fashion for upward social mobility.
• fixated on fashion 'designer' clothing, handbags, gold jewelery e.g.
Burberry,
• trying to adopt lifestyle of admired, referent class but not seen as
successful.
• considered to be in poor taste, ignorant,
• labelled as "trying too hard, not worthy enough".
VALS2 psychographic groups VALS2 psychographic groups
ActualizersActualizers
FulfilledsFulfilleds
AchieversAchievers
ExperiencersExperiencers
BelieversBelievers
StriversStrivers
MakersMakers
StrugglersStrugglers
How do you see How do you see each category
each category behaving as behaving as
buyers?
buyers?
3131
Forrester Technographics Forrester Technographics
customer segments by motivation, desire & ability to customer segments by motivation, desire & ability to
invest in technology invest in technology
3131
Start here Start here
Explain the customer behaviour appeals being Explain the customer behaviour appeals being
used by … each of the following … used by … each of the following …
a selected product group within e.g. Gillettea selected product group within e.g. Gillette
a company within the earth-moving equipment industry e.g. JCB, a company within the earth-moving equipment industry e.g. JCB, Caterpillar, Komatsu etc
Caterpillar, Komatsu etc
A group within the hotel sector including: Hilton, Accor, A group within the hotel sector including: Hilton, Accor, Travelodge, Townhouse
Travelodge, Townhouse
HMVHMV
What common or different customer behaviour appeals are being used What common or different customer behaviour appeals are being used
by by
http://www.wickes.co.uk/http://www.wickes.co.uk/
http://www.screwfix.comhttp://www.screwfix.com
http://www.diy.com/http://www.diy.com/
3333
Explain the following in terms of consumer Explain the following in terms of consumer
behaviour debate behaviour debate
fitting roomsfitting rooms
return of goods policies e.g. B&Q, Next on-linereturn of goods policies e.g. B&Q, Next on-line
2-for-1, 20% bigger2-for-1, 20% bigger
interest free for interest free for
3 months (over £300)3 months (over £300)
3-years (DFS)3-years (DFS)
"Never knowingly undersold" - John Lewis Partnership"Never knowingly undersold" - John Lewis Partnership
free delivery over £15 (Amazon)free delivery over £15 (Amazon)
main dealer trade in values, old car-new carmain dealer trade in values, old car-new car
easy financing termseasy financing terms
free insurancefree insurance
mobile phone automatic new model + cheaper contract + extrasmobile phone automatic new model + cheaper contract + extras
home deliveries e.g. Tescohome deliveries e.g. Tesco
£15 (21 days in advance), £26 (7 days), £55 – with on-line booking - £15 (21 days in advance), £26 (7 days), £55 – with on-line booking - Travelodge
Travelodge
4x Tesco Club Card points value for Cafe Rouge vouchers (£8 = £32)4x Tesco Club Card points value for Cafe Rouge vouchers (£8 = £32)
Post-purchase evaluation Post-purchase evaluation
We want customer to have positive experiences from We want customer to have positive experiences from purchase but
purchase but they may experiencethey may experience Cognitive Dissonance
Cognitive Dissonance
Pre-purchase, purchase or post-purchase Pre-purchase, purchase or post-purchase
attitudes & behaviour should be consistent with one attitudes & behaviour should be consistent with one another. If you buy a car & your friend thinks that it is another. If you buy a car & your friend thinks that it is rubbish …..
rubbish …..
uncertainty – "Have I made the right decision?"uncertainty – "Have I made the right decision?"
feel anxiety, disappointment, remorsefeel anxiety, disappointment, remorse
discrepancy between expectation & experiencediscrepancy between expectation & experience
reflect on opportunity cost and lost - difficult decision, reflect on opportunity cost and lost - difficult decision, many alternatives
many alternatives
irrevocable decisionirrevocable decision
neurotic customer (impulse buy)neurotic customer (impulse buy)
post-purchase remorsepost-purchase remorse
What can marketer &
seller do?
What can marketer &
seller do?
3535
Post-purchase Behaviour Post-purchase Behaviour
expectations are compared to performanceexpectations are compared to performance
post-purchase satisfaction influences future post-purchase satisfaction influences future behaviour
behaviour
future purchasing behaviourfuture purchasing behaviour
word-of-mouth communicationword-of-mouth communication
Marketers try to influence post-purchase Marketers try to influence post-purchase behaviour. How ?
behaviour. How ?
Post-purchase communication to reduce dissonance, Post-purchase communication to reduce dissonance, returns & order cancellations
returns & order cancellations
Talk with customers: Talk with customers:
discover new uses for existing productsdiscover new uses for existing products
etcetc
Evaluate Harley-Davidson Consumer Behaviour Evaluate Harley-Davidson Consumer Behaviour
Hells Angels ? Burly, Hells Angels ? Burly, leathers, bikers, rebels leathers, bikers, rebels
New breed: New breed:
olderolder
more affluentmore affluent
better educatedbetter educated
rubbies (rich urbans)rubbies (rich urbans)
Showrooms + sales Showrooms + sales approaches
approaches
Customer types from HD Customer types from HD research
research
adventure-loving traditionalistsadventure-loving traditionalists
sensitive pragmatistssensitive pragmatists
stylish status seekersstylish status seekers
laid-back camperslaid-back campers
classy capitalistsclassy capitalists
cool-headed lonerscool-headed loners
cocky misfitscocky misfits
all loved their Harleys becauseall loved their Harleys because
independence, freedom, powerindependence, freedom, power
more than a machine – part of more than a machine – part of self-expression
self-expression
classic look, throaty soundclassic look, throaty sound
American legendAmerican legend
3737
Scope of B2B Market Scope of B2B Market
AgricultureAgriculture
MiningMining
ConstructionConstruction
ManufacturingManufacturing
TransportTransport
Wholesale & retailWholesale & retail
Finance, insurance, Finance, insurance, property
property
GovernmentGovernment
Non-profit & voluntary Non-profit & voluntary organisations
organisations
different needs & buying different needs & buying patterns e.g. medical from patterns e.g. medical from
rubber gloves vs body scanner rubber gloves vs body scanner
buy raw materials/inputs to buy raw materials/inputs to
make other goods/services e.g.
make other goods/services e.g.
sugar & flavouring as inputs for sugar & flavouring as inputs for
Pepsi Pepsi
sell on to other business users sell on to other business users or consumers e.g. Argos
or consumers e.g. Argos
use purchases to conduct use purchases to conduct
business e.g. stationery, legal business e.g. stationery, legal
services, IT/systems services, IT/systems
consultancy, marketing services consultancy, marketing services
Purchasing decisions in B2B Markets Purchasing decisions in B2B Markets
Buying is less frequent.
Buying is less frequent.
new task buy new task buy
buying decision not been made buying decision not been made before
before
modified rebuy modified rebuy
bought before but this time bought before but this time change spec. or new supplier change spec. or new supplier
straight rebuy straight rebuy
routine purchase made many routine purchase made many times before
times before
One-off, a batch or steady One-off, a batch or steady
flow (JIT) flow (JIT)
Long, complex negotiation Long, complex negotiation Service & consistency of Service & consistency of
quality & supply are vital quality & supply are vital
Buying centre Buying centre
Buying often a group process. Buying often a group process.
Who is in the buying group?
Who is in the buying group?
Users Users
use the product e.g. trucksuse the product e.g. trucks Influencers (direct or indirect) Influencers (direct or indirect)
Tech know-how, budget etcTech know-how, budget etc Deciders
Deciders
Make the actual decision: Make the actual decision:
purchasing officer, manager, purchasing officer, manager,
product/service user product/service user Gatekeepers
Gatekeepers
Control flow of informationControl flow of information Buyers
Buyers
Select suppliers & negotiate Select suppliers & negotiate terms
terms
3939
Organisational buying Organisational buying
Need recognition, problem-awarenessNeed recognition, problem-awareness
Evaluate, negotiate, select
Evaluate, negotiate, select
Search for sources, research & approve Search for sources, research & approve
Finalise contract &
order routines Finalise contract &
order routines
Performance feedback &
evaluation
Performance feedback &
evaluation
Determine specification &
quantity
Determine specification &
quantity
Receive proposals & analyse Receive proposals & analyse Integrate partner
systems Integrate partner
systems
competition legal steps
financing JIT logistics
conflict outsourcing
quantity continuity quality price financing
life cycle costs prody
maintenance residual values risks
politics personal
Choice criteria
Can we assume that B2B buying motives are rational, methodical & objective
Personal factors incl:
relationships, self advancement Motivators include
Cost & profit-related benefits
Incentives & promotional support
Supply alliances for expansion &
synergy + share costs, improve productivity etc
Relationship Marketing Relationship Marketing
establishing & developing successful exchanges with customers.
establishing & developing successful exchanges with customers.
Influences Influences
global competition & defensive strategies. Growth in services global competition & defensive strategies. Growth in services (direct relationships). Focus on the ‘value chain’ + the ‘value (direct relationships). Focus on the ‘value chain’ + the ‘value proposition’ incl offering specific competencies
proposition’ incl offering specific competencies
Customer relationship management (CRM) Customer relationship management (CRM)
maximise customer retention & share of customer’s businessmaximise customer retention & share of customer’s business
past behaviour is important past behaviour is important
The future involves The future involves
increased WWW use – direct marketing & personalisationincreased WWW use – direct marketing & personalisation
costs of servicing unprofitable customerscosts of servicing unprofitable customers