Analyzing Consumer And Business Markets

1. TOPIC 4:
Analyzing Consumer
and Business
Markets

2. What influence
consumer
behaviour?
What major
psychological
processes influence
consumer behaviour?
How do
consumers make
purchasing
decisions?
What is
organizational
buying?
Who participate in
the business buying
process?
What are stages in
the buying process?
Cultural
Personal
Social Motivation Perception
Learning
Memory
The 5
stage
model
Characteristics
of business
market
Buying
situation
8 stages
The
buying
center

3. A) Influences in Consumer Behaviour
Cultural
is the fundamental
determinant of a person’s
wants and behaviors
Social
Subcultures
based on nationalities,
religions, racial,
geographical
E.g. feng shui-
Hong Kong’s
disneyland,
Malaysia ‘ang pau’
Reference groups (e.g. membership group-direct influences,
secondary group – professional/ trade union, aspirational group –
they did not join, dissociative group -whose values or behaviour
individual rejects)
Family
E.g. (1) family of orientation – parents and siblings which influence
toward religion, politics (2) family of procreation – more direct
influence from one’s spouse and children.
Social roles
Consists of the activities a person is expected to perform
Statuses
the position of an individual in relation to another or others,
especially in regard to social or professional standing.
Consumer
behaviour is how
individuals,
groups select,
buy, use, and
dispose of goods,
services, ideas,
experience to
satisfy their needs
and wants

4. A) Influences in Consumer Behaviour-
continue
Age & Stage in the Life
Cycle
Occupation & Economic
Circumstances
Personality & Self
Concept
Lifestyle & Values
e.g. critical life events/
transition such as
marriage, childbirth
e.g. type of occupation,
saving, debt, attitudes
towards spending
Brand Personality
Sincerity Hello kitty
Excitement MTV
Competence Sony
Sophistication Shiseido
Ruggedness Timberland
Passion Zara
Peacefulness Yamaha
Lifestyle = a person’s
pattern of living +
expressed in activities,
opinion. Shaped by
money/time constrained
Core values = the belief
system underlie
consumer attitudes &
behaviours. E.g. quality,
community, commitment

5. B) Key Psychological Processes

6. Freud’s
Theory
Behaviour is guided
by subconscious
motivations
Maslow’s
Hierarchy
of Needs
Behaviour is driven
by lowest, unmet
need
Herzberg’s
Two-Factor
Theory
Behaviour is guided
by the dissatisfaction
+ satisfaction
 Brand’s shape, size,
weight capable to
trigger certain
consumer association
+emotion
 In-depth interview is
used to uncover
deeper motivation
MOTIVATION
E.g. Computer
with/ without
warranty + other
benefit.
Seller should:
-Avoid dissatisfiers
-The major
satisfiers

7. Perception
Individual selects,
organizes + interprets
info into
meaningful picture
Learning
Changes in behaviour
due to experience
Memory
All the information +
experiences will end
up in the memory
Selective attention-
notice only selected
stimuli
 Selective distortion
– tendency to interpret
info with prior
product/ brand beliefs.
Selective retention-
remember good points
about product
consumer like.
PERCEPTION, LEARNING AND MEMORY
Memory encoding – how +
where info gets into
memory. Marketers have
to strengthen their brand
association (feel, thought,
experience, belief)
Memory retrieval – how info get
out of memory. Marketers have :
to create more cues, aware the
presence of other product,
underlay exposure time
 Drive – strong internal
stimulus impelling action.
E.g buy computer
Cues- minor stimuli that
determine where, when
and how a person
respond. E.g. brand,
product features
Discrimination –
recognize diff. in a set of
similar stimuli

8. C) The Buying Decision Process: The 5-
Stage Model
Problem Recognition
Information Search
Evaluation of alternatives
Purchase Decision
Postpurchase Behavior
Personal (family,
friends)
Commercial
(advert, web sites)
Public (mass media,
consumer rating org
Experiential (using
the product)
Market partitioning
– marketers need
to identify the
hierarchy of
attributes that
guide consumer.
E.g. nation/brand –
dominant
hierarchy,

9. C) The Buying Decision Process: The 5-
Stage Model-continue
Problem Recognition
Information Search
Evaluation of alternatives
Purchase Decision
Postpurchase Behavior
The expectancy-
value model =
attitude
formation put
forward that
consumer
evaluate products
and services by
combining their
brand beliefs
according to
importance
Marketer strategies :
Redesign the product
Alter belief of brand
Alter belief of competitors brand
Alter the importance weights
Call attention to neglected
attributes
Shift the buyer’s ideal levels for
more attributes

10. C) The Buying Decision Process: The 5-
Stage Model-continue
Postpurchase Behavior
Postpurchase
satisfaction
(satisfied,
dissatisfied,
delighted)
Postpurchase
actions
(purchase,
complaining,
warning friend

11. D) Organizational Buying
Def: Organizational buying refers to the decision-making process by which
formal organizations establish the need for purchased products and services,
and identify, evaluate, and choose among alternative brands and suppliers
• Fewer buyers
• Close supplier-
customer relationships
• Professional
purchasing
• Many buying
influences
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically
concentrated buyers
• Direct purchasing
Characteristics
Straight Rebuy
(re-orders on a routine
basis)
Modified Rebuy
(modify product, price,
delivery)
New Task
(buy first time, greater
risk and longer time)
Buying Situation

12. E) Participants in the Business Buying
Process
The Buying Center
Initiators Users or others in the organization
Users Those who will use the product/service. Initiate the buying
proposal +define product
Influencers People who influence the buying decision. E.g. technical
personnel
Deciders Decide on product / supplier
Approvers People who authorize the proposed actions of deciders/buyers
Buyers People who have formal authority to select the supplier and
arrange the purchase term
Gatekeepers People who have the power to prevent sellers or info from
reaching members of the buying center. E.g. Purchasing agents,
telephone operators.

13. F) Stages in the Buying Process
Problem recognition Internal – machine breakdown, new product development.
External – get new idea from the trade show
General need
description
Complex item – buyer will work with expert to define
characteristics such as price, durability
Product specification Define the component needed for that product
Supplier search Via trade directories, contact with other companies, trade
advertisement, trade show
Proposal solicitation Invite qualified suppliers to submit proposal
Supplier selection Use supplier evaluation model based on attributes and
important weights, rating scale
Order-routine
specification
Negotiate the final order, expected time of delivery, return
policies, warranties
Performance review Review the supplier performance either contact the end
user and ask for the evaluation, buyer rate supplier on
weighted score or buyer aggregate the cost of poor
performance.
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