Analyze ...
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TOPIC 4:
Analyzing Consumer and Business
Markets
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
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 rolesConsists of the activities a person is expected to perform
Statusesthe 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
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 constrainedCore values = the belief system underlie consumer attitudes & behaviours. E.g. quality, community, commitment
Freud’s
TheoryBehaviour is guided
by subconscious
motivations
Maslow’s
Hierarchy
of NeedsBehaviour is driven
by lowest, unmet
need
Herzberg’s
Two-Factor
TheoryBehaviour 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
Perception Individual selects,
organizes + interprets
info into
meaningful picture
LearningChanges in behaviour
due to experience
MemoryAll 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 computerCues- minor stimuli that determine where, when and how a person respond. E.g. brand, product featuresDiscrimination –recognize diff. in a set of similar stimuli
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 orgExperiential (using the product)
Market partitioning – marketers need to identify the hierarchy of attributes that guide consumer. E.g. nation/brand –dominant hierarchy,
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 productAlter belief of brandAlter belief of competitors brand Alter the importance weightsCall attention to neglected attributesShift the buyer’s ideal levels for more attributes
C) The Buying Decision Process: The 5-Stage Model-continue
Postpurchase Behavior
Postpurchase satisfaction (satisfied, dissatisfied, delighted)Postpurchase actions (purchase, complaining, warning friend
D) Organizational BuyingDef: 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
E) Participants in the Business Buying ProcessThe 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.
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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