dsbm 05- conusmer behavior [autosaved]
TRANSCRIPT
05.UNDERSTANDING CONSUMER
THARAKA DIASDirector – Essence BTC
MBA(USA), MBA(Aldersgate),BBA(USA), Dip in Mgt, ACIM(UK),
FAEA(Dip in AEA-UK), FinstSMM(UK), CPM(Asia), MSLIM, PM(Sri-
Lanka)
WHY DO WE NEED TO STUDY CONSUMER BEHAVIOR?
BECAUSE NO LONGER CAN WE TAKE THE CUSTOMER/CONSUMER FOR GRANTED.
FAILURE RATES OF NEW PRODUCTS INTRODUCED
Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later.
Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.
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ALL MANAGERS MUST BECOME RESPECT ANALYSTS OF CONSUMER MOTIVATION AND BEHAVIOR
CAN MARKETING BE STANDARDIZED?
NO.
BECAUSE CROSS - CULTURAL STYLES, HABITS, TASTES, PREVENTS SUCH STANDARDIZATION.
UNLESS MANAGEMENTS ACT
THE MORE SUCCESSFUL A FIRM HAS BEEN IN THE PAST, THE MORE LIKELY IS IT TO FAIL IN THE FUTURE.
WHY?
BECAUSE PEOPLE TEND TO REPEAT BEHAVIOUR FOR WHICH THEY HAVE BEEN REWARDED.
LANGUAGE PROBLEMS
“Please leave your values at the desk” - Paris hotel
“Drop your trousers here for best results” - Bangkok laundry
“The manager has personally passed all water served here” - Acapulco restaurant
“Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested that the lobby be used for the
purpose.” - Zurich hotel
Ladies are requested not to have children in the bar.”- Norway bar
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“COME ALIVE WITH PEPSI”
“Come alive out of the grave” - Germany
“Pepsi brings your ancestors back from the grave” - China
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BUYER BEHAVIOUR
4Ps Marketing
Environment
Buyer
Characteristics
Buyer
Decision Process
Buyer
Decision
Consumer
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MARKETING STIMULI
Product Price Place Promotion
4 Ps
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OTHER STIMULI
Economic Technological Political Cultural
Marketing
Environment
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Consumer Needs
Consumer Wants
Demand
Hierarchy of Needs
Customer and Consumer
CONSUMER NEEDS, WANTS AND DEMAND
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THIS IS A NEED
Needs - state of felt deprivation including physical, social, and individual needs (e.g., food)
THIS IS A WANTWants - form
that a human need takes as shaped by culture and individual personality (e.g., pastry)
Experiences Persons
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Places
Organizations IdeasActivities
WHAT WILL SATISFY CONSUMERS’ NEEDS & WANTS?
Services
Activity or Benefit Offered for Sale That is EssentiallyIntangible and Doesn’t Result in the Ownership of Anything
MASLOW’S HIERARCHY OF NEEDS
CONSUMER BUYING BEHAVIOR
Consumer Market - All the individuals and households who buy or acquire goods and services for personal consumption.
Consumer Buying Behavior
The buying behavior of final consumers – individuals and households who buy goods and service for personal or household consumption. (Philip Kotler)
Buying behavior is the decision process and actions of people involved in buying and using products.
BUYER’S DECISION PROCESS
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Consumption
Post purchase behavior
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ORGANIZATIONAL BUYING BEHAVIOR
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Consumer vs. Organizational buying behavior
Main types of buying situations in B2B
Stages of decision in B2B
Roles in B2B procurement
Influences on organizational behavior
Buying centres in summary
CONSUMER VS. ORGANIZATIONALBUYING BEHAVIOR
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Decisions made by consumers are quite simple
Organizational buying processes are more complicated, there are several phases and steps
Different buying behavior for different products andtarget groups
Simple consumer goods like food and beverages arebought very spontaneously – influenced by advertisingand product presentation
For premium consumer goods (expensive clothes, computers) – buying behavior is getting more rational –comparison
Private investment goods – price bargaining
B2B PRODUCTS – ORGANIZATIONALPROCUREMENT STARTS
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More than one person involved
Buying process follows certain rules
Price comparison, standardisation, tenders = Ausschreibungen)
B2B SYSTEMS
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involve more capabilities and greater workloads
From the buyer‘s and the supplier‘s side decision hasmore extensive consequences
B2B FACILITIES
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Industrial plants
Manufacturing installations
Office buildings
MAIN TYPES OF BUYING SITUATIONS IN B2B
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Straigtht rebuy – routine decision, repetitive process (energy, office supplies, raw materials, wood, cigarettes), componentsuppliers for the automotive industry – little or no newinformation
Modified rebuy – more complicated but less sophisticated: cars, trucks, computers, consulting – modified rebuys are oftentreated too uncautious
New task – calls for thorough research – industrial plant –highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, militaryequipment, infrastructure) – re-evaluation of alternatives andsearch for new information and new alternatives
BUYING PHASES
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Problem recognition
General need description
Product specification
Supplier search
Proposal solicitation
Supplier selection
Order routine specification
Performance review
STAGES OF DECISION IN B2B PROCUREMENT
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Backhaus developed a widely usable model todistinguish between 5 phases of procurement
Preliminary application (initiation phase)
Tender proposal
Negotiation
Processing of order
Warranty and services
PRELIMINARY APPLICATION
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Recognition of a problem (need) and a general solution
Released by top management = operating departmentor external consultants
Result request for an offer addressed to a number ofpotential suppliers
TENDER PREPARATION PHASE
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Determination of characteristics and quantity of needed items
Search for and qualification of potential sources
Supplier has to provide an offer
Tries to be incomparable with his competitors
Customer tries to make the offer best comparable
NEGOTIATION PHASE
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core selling process
Comprises acquisition and analysis of proposals, evaluation of proposals and selection ofsuppliers
PROCESSING PHASE/WARRANTY/ SERVICE PHASE
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Contains selection of an order routine
Realisation of the transaction along with the fixation ofafter sales service tasks
ROLES IN B2B PROCUREMENT –BUYING CENTER CONCEPT
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Group of people involved in the buying process – buyingcenter
Webster/Wind model shows 5 different roles – not institutionalised
This causes probleme in identifying and targeting theright people within the decision process
BUYING CENTER
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Role keepers have different tasks – not mandatory
Buyer
User
Initiator
Gatekeeper
Influencer
BUYER
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Formal authority to sign contracts
Member of purchasing department
Influences the vendor selection
Not in technical details
Main criteria: price + terms and conditions of thecontract
USER
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Person working with the product
Interested in benefits and unobstructed function of theproduct to buy
Large knowhow and preconceived opinion
INFLUENCER
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A person with high technical knowledge andpractical experience
definition of minimum requirements on technical or company standards
GATEKEEPER
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Controls the flow of information within thebuying center
Assistant of decision maker
Influence by preparing the decision and therelevant documents
DECIDER
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Right to say yes or no
Mightiest person
INITIATOR
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Person who brings new ideas and solutions intothe company
SPECIFIC MARKETING CONSIDERATIONSIN THE INDUSTRIAL FACILITIES BUSINESS
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Long decision taking process
High risk
Complex buying center
The specific competitive situation
PRODUCT POLICY
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Focuses on innovation
Has to care for high flexibility in research anddevelopment
And manufacturing and assembling
PRICE
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Strict bid and tender rules
High transparency
Add value with service offering to achieve a differentiating position
Another aspect: financing and sourcing models
DISTRIBUTION POLICY
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Focus on negotiation phase
Provide excellent people in the selling center
High technical knowledge
COMMUNICATION
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Problem solver!
Proving success with comparable tasks
Reference projects!
KEY CHARACTERISTICS OF ORGANISATIONAL/BUSINESS BUYING BEHAVIOUR
Fewer, larger Buyers
Geographically Concentrated
Derived demand
Close Supplier–customer Relationship
Professional Purchasing
Multiple Buying Influences
Direct Purchasing
Motives for purchase
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