Session 10 MG 220 BBA - 8 Sep 10

MG 220 Marketing ManagementBBA 09 – Sec C

Fall 2010

Muhammad Talha Salam, Asst. [email protected]

Access it online: www.slideshare.net/talhasalam

Part 3: Connecting with Customers

> The Buying Decision Process: The Five-stage Model

> What is Organizational Buying?> Participants in the Business Buying

Process> Stages in the Buying Process> Institutional and Government Markets

Class Presentation | Session 10 | 8 Sep 2010

MG 220 Marketing Management 2Access it online: www.slideshare.net/talhasalam

The Buying Decision Process

• The Five-Stage Model• A Psychological Process

which needs to beunderstood by Marketers

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-Purchase Behavior


The Buying Decision ProcessStage 1: Problem Recognition

• A buyer recognizes a problem……i.e. “a need”

• Either stimulated by– Internal Stimuli (Hunger, Thirst, Tiredness)– External Stimuli (Seeing an ad)

• Marketers:– Need to identify circumstances that trigger a particular

need– Can Devise campaigns to generate external stimuli

Particularly for high-end, luxury items


The Buying Decision ProcessStage 2: Information Search

• An aroused/interested consumer will be inclined to search for more information

• Now (s)he wants to buy and is looking for information

• Two levels of interest:– Milder: Heightened Attention (pays attention to communication)– Sharper: Active information search (finding information)

• Information sources:– Personal– Commercial (most frequent)– Public– Experiential

• Role of internet

• Information Sets(buying a LCD)

Total SetALL THE BRANDS

•Sony•Samsung•LG•Phillips•Nobel/TCL•Panasonic•Acer

Awareness SetWHICH I KNOW

•Sony•Samsung•LG•Phillips•Nobel/TCL

Consideration SetWHICH I CAN BUY

•Sony•Samsung•Phillips•Nobel/TCL

Choice SetWHICH I “LIKE”

•Sony•Samsung

DecisionMY FINAL PICK

•FINAL DECISION


The Buying Decision ProcessStage 3: Evaluation of Alternatives

• While buying a consumer is:– Trying to satisfy a need– Looking for certain benefits from the product solution– Seeing each product as a bundle of attributes with varying abilities

for delivering the benefits• Consumers pay most attention to products that deliver

sought-after benefits

• Beliefs & Attitudes– Evaluation reflects Beliefs & Attitudes– People’s beliefs and attitudes affect their buying behavior

• Expectancy-Value Model– Consumers Evaluate Products/Services by combining their brand beliefs –

positives and negatives – according to importance– Weighted Rating


The Buying Decision ProcessStage 4: Purchase Decisions

• Five decisions during actual purchase:– Brand– Source/Shop/Retailer/Dealer– Quantity– Timing– Payment Method

• Further Considerations– Non-Compensatory Models of Consumer Choice

• Consumers not necessarily make exact choices• They take “mental shortcuts”

– Intervening Factors• Attitude of Others• Unanticipated Situational Factors

• Different [perceived] risks– Functional (does not perform up to expected)– Physical (it can harm)– Financial (may not be worth it)– Social (embarrassing in front of others)– Psychological (affects psychologically)– Time (if product fails, time is wasted for a better alternative)


The Buying Decision ProcessStage 5: Post-Purchase Behavior

• Impacts future engagement of customer

• Post-Purchase Satisfaction– Satisfaction depends on expectation

• Post-Purchase Actions– Subsequent re-buy or abandoning (forever may be)– Telling to others

• Post-Purchase Use & Disposal– Sales Frequency depends on product consumption rate

Quickly finished => Quick re-buying– Also observe how they “dispose” it.


Other Theories of Consumer Decision Making

• Buying Process is not as structured and planned like this always.

• It may vary a lot and there are other theories (always evolving) to understand it.

• Not covered in syllabus of this course


What is Organizational BuyingBusiness Market vs. Consumer Market

• Fewer, larger buyers• Close supplier-customer relationships• Professional purchasing• Many buying influences• Multiple sales calls• Derived demand• Inelastic demand• Fluctuating demand• Geographically concentrated buyers• Direct purchasing


What is Organizational BuyingBuying Situations

• Suppliers– In-Suppliers: Those who are on approved list and are selling to the

company– Out-Suppliers: Those who are trying to penetrate

• Situations– Straight Re-Buy

• Ordering again with same specs• Generally to same seller or in-sellers• Out-Sellers try to do something “new” to enter

– Modified Re-Buy• Revised specs or requirements in any form• New suppliers may be called | Critical for In-Suppliers

– New Task• Buying for the first time• Complete process is carried out starting from developing specs and requirements• Strong evaluations and multiple reviews etc.


What is Organizational BuyingSystems Buying and Selling

• Systems Buying: Buying a complete solution from a supplier/seller

• Going for Turnkey solution

• May even involve Systems Contracting – Even providing repairing & maintenance as part of sales

• Sales of F-16s to Pakistan from USA includes?


Participants in the Business Buying ProcessThe Buying Center• Buying Center

All those individuals and groups who participate in purchasing decision-making process in any of following roles:

1. Initiatorswho request purchase – may be “users”

2. UsersWho are going to use the product/services directly

3. InfluencersWho develop specs or influence buying process – technical teams, accounts, finance etc

4. DecidersWho decide specs, requirements or suppliers

5. ApproversHaving authority to approve

6. BuyersWho execute the “purchase” process

7. GatekeepersWho can prevent information/suppliers to reach to right person(s) Consider: a security guard or telephone operator not letting you in!


Participants in the Business Buying ProcessBuyer Center Targeting• Buying Center Targeting

is all about understanding the buyer – their criterion, their requirements, their processes etc.

• Key types of business consumers1. Price-oriented customers | Transaction Selling

Price is everything

2. Solution-oriented customers | Consultative Selling Going for solution and will listen to arguments for price vs. services/solution

3. Gold-Standard customers | Quality Selling Want best performance, quality, specs, service etc.

4. Strategic-value customers | Enterprise Selling Fairly permanent relationship – rather than just a buying activity


Participants in the Business Buying ProcessBuyer Center Targeting (…contd.)

• Solution SellingOffer a complete “solution”Helps alleviate pricing pressureHelps becoming exclusive

• Key examples1. Solutions to enhance customer revenues2. Solutions to decrease customer risks3. Solutions to reduce customer costs


Stages in Buying Process

• Typical Stages1. Problem Recognition2. General Need Description3. Product Specification4. Supplier Search5. Proposal Solicitation6. Supplier Selection7. Order-Routine Specification8. Performance Review


• TOPICS IN CHAP 7

• Purchasing/Procurement Process• Managing Business-to-Business Customer

Relationships• Institutional and Government Markets

• Not covered in syllabus of this course

MG 220 Marketing ManagementBBA 09 – Sec C

Fall 2010

Muhammad Talha Salam, Asst. [email protected]

Access it online: www.slideshare.net/talhasalam

Part 3: Connecting with Customers

> Overall Review of Chap 5,6 & 7> Levels of Market Segmentation> Segmenting Consumer Markets> Quiz 3 (Chap 5-7 | Session 8-10)

Class Presentation | Session 11 | 15 Sep 2010

Session 10 MG 220 BBA - 8 Sep 10

Business

Transcript of Session 10 MG 220 BBA - 8 Sep 10