Principles of Marketing REVIEWER

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Module 1.

1 MARKETING AND THE MARKETING PROCESS other words, when you hear “utility” in marketing, think
“usefulness to customers.”
Marketing is made up of every process involved in
Marketing creates several different types of utility:
moving a product or service from the organization to
the consumer. It includes discerning the needs of • Form utility. Form utility refers to how well an
customers, developing products or services to meet organization can increase the value of its product in the
those needs, identifying who is likely to purchase the customer’s eyes by making changes and altering its
products or services, promoting them, and moving them physical appearance.
through the appropriate distribution channels to reach
• Time utility. Marketing creates time utility when it
those customers.
makes products and services available to customers so
Marketing can also be defined as the set of activities that they can buy it when it is most convenient for
involved in identifying and anticipating customer needs them.
and then attempting to satisfy those needs profitably.
• Place utility. Marketing creates place utility when it
• Identifying customer needs. makes goods or services physically available,
convenient, and accessible to customers.
• Anticipating customer needs.
• Possession utility. Marketers facilitate possession
• Satisfying customer needs.
utility by ensuring that a product is relatively easy to
• Profitably. acquire.

How Marketing Benefits the Organization, Its Interested Marketing’s primary benefit to society is that it drives
Parties, and Society the consumer economy. Marketing leads to increased
sales and revenue for a business which enables them to
 Interested parties are those persons or entities that expand operations, create more internal jobs and
have an interest in the success or failure of a external jobs for partners like suppliers. Marketing also
company. These parties can be categorized into contributes tax revenue to local, state, and federal
two types: internal and external. governments, ultimately leading to overall economic
 Internal interested parties are entities that reside growth.
within the organization and that affect or are
affected by the actions of the company. These The marketing process refers to the series of steps that
entities include employees, owners, managers, and assist businesses in planning, analyzing, implementing,
investors (shareholders). and adjusting their marketing strategy.
 External interested parties include those outside
the company, such as customers, creditors,
suppliers, distributors, and even society at large.
External groups don’t have a direct say in the
company’s decision-making process.

How does marketing benefit external parties?

1. First, consider what marketing does for


consumers. It draws out their needs, creates
new demand, locates untapped opportunities,
and determines the possibilities of selling new
products.
2. Second, marketing creates form, time, place,
and possession utilities for the company’s
goods and services.

Utility refers to a product’s usefulness to customers so


that they are convinced enough to make a purchase. In
 Step 1: Understand Both the Marketplace and • Psychological value: how much that product allows
Customers the customer to “feel better”

Before you can start the marketing process, you need to


have a good idea of what your marketplace looks like.
This means answering some basic questions about your
customers, like who they are, their income and
purchasing power, and how much they’re likely to  Step 4: Grow Profitable Customer Relations
spend (particularly on your products or services). If you
decide to sell at lower prices in order to attain higher The bottom line is that profitable customer
unit sales volume, your marketing strategy would look relationships are the “secret sauce” of any business.
very different than if you decided to sell fewer products This step in the marketing process is where marketers
at a higher price. acquire, keep, and grow customer relationships.
Successful marketers know that acquiring customers is
 Step 2: Develop a Customer-Driven Marketing one of the hardest (not to mention one of the most
Strategy expensive) elements of marketing.
Marketing strategy refers to a business’s overall “game It isn’t enough to have a one-and-done sale. You want
plan” to focus its limited resources in order to reach repeat buyers, so marketers need to remind customers
prospective customers and turn them into paying about the company’s products and/or services and how
customers, hopefully for the long run. those products and services have met their needs and
improved their lives so they make repeat purchases.
It’s said that there are two basic types of marketing
Marketers need to consider how to reach customers
strategy: a product-driven, “build-it-and they-will-
about their offerings and make it easy and convenient
come” strategy and a customer-driven strategy.
for those customers to make continued purchases.
It’s about establishing a connection and a relationship. When customers have a positive relationship with a
It’s about understanding who your customers are, what company or its products or services, they’re more likely
their needs and wants are, and how you can best meet to become repeat buyers. Satisfied customers are also
those needs and wants. It’s about knowing your target more likely to be interested in buying additional
market better than your competitors do and creating a products or services from your company, and they tend
strong value proposition for those users—a promise of to recommend products to others, further reducing the
value that communicates the benefits of your company’s costs of getting new customers.
company’s products or services.
 Step 5: Capture Customer Value in the Form of
 Step 3: Deliver High Customer Value Profits

By definition, customer value is the ratio between the The goal of successful customer relationship
perceived benefits and costs incurred by the customer management (CRM) is creating high customer equity—
in acquiring your products or services. Value is the potential profits a company earns from its current
increased by boosting the benefits (in the form of and potential customers. It’s a relatively simple
product, place, or promotion) or minimizing the price. concept: increasing customer loyalty results in higher
customer equity.
But “value” from the customer’s perspective is a
complex term, because we’re really considering four Increasing customer equity is the goal of marketers
different values types: because it’s a bellwether for financial success. Think
about it in simple terms: the higher a company’s
• Functional value: what the product “does” for the
customer equity, the more profit the company
customer in terms of solving a particular want or need
generates, and the more valuable that company (and its
• Monetary value: what the product actually costs
products or services) becomes on the market.
relative to its perceived worth
• Social value: how much owning the product allows the
customer to connect with others
experience, not acquisition. For many of the Gen Xers
who are parents, family comes first — both children and
their aging parents — and career second.

From a marketing standpoint, the Gen Xers are a more


Module 3.2 DEMOGRAPHIC ENVIRONMENT skeptical bunch. They are sensible shoppers who
research products heavily before they consider a
purchase, prefer quality to quantity, and tend to be less
receptive to overt marketing pitches. They are more
Demography is the study of human populations in terms receptive to irreverent ad pitches that make fun of
of size, density, location, age, gender, race, occupation, convention and tradition. The first to grow up in the
and other statistics. The demographic environment is of internet era, Generation X is a connected generation
major interest to marketers because it involves people, that embraces the benefits of new technology.
and people make up markets.
Millennials. Born between 1977 and 2000, these
Changes in the world demographic environment have children of the baby boomers. Also called Generation Y
major implications for business. Thus, marketers keep a or the echo boomers. Millennials are the most
close eye on demographic trends and developments in financially strapped generation. One thing that all
their markets. They analyze changing age and family millennials have in common is their comfort with digital
structures, geographic population shifts, educational technology. They don’t just embrace technology; it’s a
characteristics, and population diversity. way of life. The millennials were the first generation to
grow up in a world filled with computers, mobile
The Changing Age Structure of the Population
phones, satellite TV, iPods and iPads, and online social
The Baby Boomers . The post – World War II baby boom media. As a result, they engage with brands in an
produced 78 million baby boomers, who were born entirely new way, such as with mobile or social media.
between 1946 and 1964. Over the years, the baby
Millennials tend to be frugal, practical, connected,
boomers have been one of the most powerful forces
mobile, and impatient. More than sales pitches from
shaping the marketing environment. The boomers
marketers, millennials seek authenticity and
constitute a lucrative market for financial services, new
opportunities to shape their own brand experiences and
housing and home remodeling, new cars, travel and
share them with others
entertainment, eating out, health and fitness products,
and just about everything else. And contrary to the Generation Z. Hard on the heels of the millennials is
popular belief that they are staid in their ways, one Generation Z, young people born after 2000. Most
recent survey found that 82 percent of boomers are members of Generation Z are children of Generation X
open to new brands. Says a researcher, “Changing and or younger Baby Boomers. Even more than the
trying new brands helps boomers feel like they are millennials, the defining characteristic of Gen Zers is
staying current.” More active boomers have no their utter fluency and comfort with digital
intention of abandoning their youthful lifestyles as they technologies. Generation Z takes smartphones, tablets,
age. Boomers are also digitally active and increasingly internet - connected game consoles, wireless internet,
social media savvy. They are the fastest - growing and digital and social media for granted — they’ve
shopper demographic online, outspending younger always had them — making this group highly mobile,
generations two to one. They are also the fastest - connected, and social. On average, connected Gen Zers
growing social media users, with an 80 percent surge in receive more than 3,000 texts per month. “If they’re
Facebook usage over the past four years. awake, they’re online,” quips one analyst. They have
“digital in their DNA,” says another.
Generation X. People born between 1965 and 1976.
Author Douglas Coupland calls them Generation X Gen Zers blend the online and offline worlds seamlessly
because they lie in the shadow of the boomers. The as they socialize and shop. According to recent studies,
Generation Xers are a sometimes - overlooked despite their youth, more than half of all Generation Z
consumer group. Although they seek success, they are tweens and teens do product research before buying a
less materialistic than the other groups; they prize
product or having their parents buy it for them. Of interethnic, and 7.3 percent of same - sex couple
those who shop online, more than half prefer shopping households are raising children. Marketers must
online in categories ranging from electronics, books, consider the special needs of nontraditional households
music, sports equipment, and beauty products to because they are now growing more rapidly than
clothes, shoes, and fashion accessories . traditional households. Each group has distinctive needs
and buying habits.
Generation Alpha (Gen Alpha for short) is the
demographic cohort succeeding Generation Z. Scientists Fewer than half of today’s households contain married
and popular media use the early 2010s as starting birth couples, down from 76 percent in 1940. Married
years and the early - to - mid 2020s as ending birth couples with children under 18 represent only 19
years. Generation Alpha is the first to be born entirely in percent of the nation’s 125 million households. Married
the 21st century and the third millennium. Members of couples without children represent 23 percent, and
Generation Alpha are mostly children of Millennials and single parents are another 14 percent. A full 34 percent
older Generation Z. are nonfamily households — singles living alone or
unrelated adults of one or both sexes living together.
Generation Alpha has been born at a time of falling
fertility rates across much of the world and are
experiencing the effects of the COVID - 19 pandemic as
However, the one trait shared among most families, is
young children. For those with access, children's
their desire to spend time with their loved ones. In a
entertainment has been increasingly dominated by
world recently pulled apart by disastrous events, family
electronic technology, social networks, and streaming
is especially now more important than ever. Marketing
services, with interest in traditional television
to the family can therefore is a powerful tactical
concurrently falling. Changes in the use of technology in
approach to draw consumers with families to business.
classrooms and other aspects of life have had a
significant effect on how this generation has First - time parents are looking for answers to why their
experienced early learning compared to previous babies are crying so much, while other parents may be
generations. Studies have suggested that allergies, concerned about getting the best education for their
obesity and health problems related to screen time children. Older children within the family will have
have become increasingly prevalent among children in different concerns such as, ‘how to save up for their first
recent years. big buy without depending on their parents' finances.
With all these burning questions floating around social
The Changing Family Group
media, it is the perfect opportunity for business to
The traditional household consists of a husband, wife, engage with these audiences and provide advice in the
and children (and sometimes grandparents) . Families form of blogs or fun images and videos. It is important
are a central part of the human experience. Most of us to remember that families come in all shapes, sizes, and
come from families and go off to, intentionally or colors, and with different characteristics. Advertising
unintentionally, start new families of our own. It is, should encompass, as much as possible, the many
therefore, one of the largest, key markets that different types of families within the target market.
businesses pay attention to when developing their
marketing strategies. However, the word ‘family’ has
taken on new meanings. Families have evolved beyond
the traditional household consisting of a husband, a
wife, and children. The common familial structure has
changed and with it, the needs of the individual
members within various structures.

More people are divorcing or separating, choosing not


to marry, marrying later, remarrying, or marrying
without intending to have children. Currently, 15
percent of all new marriages are interracial or
Module 3.3 CULTURAL ENVIRONMENT of this, he/she feels embarrassed (napahiya) and
slighted.
The cultural environment is made up of institutions and Utang na loob: This means debt of gratitude or debt of
other forces that affect society’s basic values, honor. A Filipino returns his/her gratitude to anyone
perceptions, and behaviors. Certain cultural who has given him/her the financial or moral support.
characteristics can affect marketing decision making.
Among the most dynamic cultural characteristics are: Pakikisama: This is cooperation or camaraderie among
peers or colleagues.
• Persistence of cultural values. People’s core beliefs
and values have a high degree of persistence. Core Bahala na: For a Filipino, he or she “allows destiny to
beliefs and values are passed on from parents to take its course” or “ leave its fate to GOD” situations like
children and are reinforced by schools, churches, installment buying or purchasing a new brand.
businesses and government. Secondary beliefs and
Filipino “Yes”. Author listed occasions in the Filipino
values are more open to change.
Social Science and Value System when a Filipino says
• Shifts in secondary cultural values. Since secondary
“yes”
cultural values and beliefs are open to change,
marketers want to spot them and be able to o When he or does know
capitalize on the change potential. o When he wants to impress
o When he wants to end the conversation
Lifestyle. People coming from the same subculture,
o When he is annoyed
social class, and occupational may have different
lifestyles. o When the instruction is half-understood
o When he is not sure of himself
• Lifestyle is a person’s pattern of living as expressed
in his or her psychographics. POLITICAL ENVIRONMENT
• It involves measuring consumers’ major AIO
dimensions – activities (work, hobbies, sports, social The political environment includes laws, government
events); interests (food, fashion, family, recreation); agencies, and pressure groups that influence and limit
and opinions (about themselves, social issues, various organization and individuals in a given society.
business, products). Lifestyle captures something Business is regulated by various forms of legislation.
more than the person’s social class or personality. It • Government develops public policies to guide
profiles a person’s whole pattern of acting and commerce – sets of laws and regulations limiting
interacting in the world. business for the good of society as a whole.
• Almost every marketing activity is subject to a
The Filipino Personality Traits
wide range of laws and regulations.
Filipinos have unique personality that distinguishes
them from other people. Knowing the Filipino Some trends in the political environment include:
personality traits will help marketers prepare and fit • Increasing legislation to:
their marketing programs to its Filipino target market. o Protect companies from each other
Among these personality traits are the following: o Protect consumers from unfair business
practices
Hiya: Involving the ego, “it is a kind of anxiety, fear of
o Protect interests of society against
being left exposed, unprotected and unaccepted. It is
unrestrained business behavior
hiya that makes the Filipino not to approach the store
• Changing government agency enforcement –
clerk, not to enter a store or restaurant without any
new laws and their enforcement will continue
customer inside, or to verbally order over-the-counter
or increase
some pharmaceutical products.
• Increased emphasis on ethics and socially
Amor propio: It is self-esteem, specially manifested responsible actions – socially responsible firms
when he or she cannot afford the merchandise. For the actively seek out ways to protect the long-run
Filipino, it is an insult to his or her amor propio. Because
interests of their consumers and the most part, marketers cannot control such factors, but
environment. they must take them into account.

Module 4 CONSUMER MARKET AND BUYING Cultural Factors


BEHAVIOR Cultural factors exert a broad and deep influence on
consumer behavior. Marketers need to understand the
Consumers make many buying decisions every day, and
role played by the buyer’s culture, subculture, and
the buying decision is the focal point of the marketer’s
social class.
effort. Most large companies research consumer buying
decisions in great detail to answer questions about what Culture
consumers buy, where they buy, how and how much
Culture is the most basic cause of a person’s wants and
behavior. Human behavior is largely learned. Growing
up in a society, a child learns basic values, perceptions,
wants, and behaviors from his or her family and other
important institutions. Every group or society has a
culture, and cultural influences on buying behavior may
vary greatly from both county to county and country to
country.

Marketers are always trying to spot cultural shifts so as


to discover new products that might be wanted.
they buy, when they buy, and why they buy.
Subculture
The figure shows that marketing and other stimuli enter
Each culture contains smaller subcultures, or groups of
the consumer’s “black box” and produce certain
people with shared value systems based on common
responses Marketers want to understand how the
life experiences and situations. Subcultures include
stimuli are changed into responses inside the
nationalities, religions, racial groups, and geographic
consumer’s black box, which has two parts. First, the
regions. Many subcultures make up important market
buyer’s characteristics influence how he or she
segments, and marketers often design products and
perceives and reacts to the stimuli. These characteristics
marketing programs tailored to their needs.
include a variety of cultural, social, personal, and
psychological factors. Second, the buyer’s decision Social Class
process itself affects his or her behavior. This decision
process – from need recognition, information search, Almost every society has some form of social class
and alternative evaluation to the purchase decision and structure. Social classes are society’s relatively
post purchase behavior – begins long before the actual permanent and ordered divisions whose members
purchase decision and continues long after. share similar values, interests, and behaviors. Social
class is not determined by a single factor, such as
Characteristics Affecting Consumer Behavior income, but is measured as a combination of
occupation, income, education, wealth, and other
Purchases are influenced strongly by cultural, social,
variables. In some social systems, members of different
personal, and psychological characteristics. For the
classes are reared for certain roles and cannot change
their social positions. The lines between social classes
are not fixed and rigid; people can move to a higher
social class or drop into a lower one.

Marketers are interested in social class because people


within a given social class tend to exhibit similar buying
behavior. Social classes show distinct product and brand
preferences in areas such as clothing, home furnishings,
travel and leisure activity, financial ser vices, and past several years, a new type of social interaction has
automobiles. exploded onto the scene—online social networking.
Online social networks are online communities where
people socialize or exchange information and opinions.
Social Factors Social networking communities range from blogs and
message boards to social media sites and even
A consumer’s behavior also is influenced by social communal shopping sites. These online forms of
factors, such as the consumer’s small groups, social consumer-to consumer and business-to-consumer
networks, family, and social roles and status. dialogue have big implications for marketers.
Groups and Social Networks Marketers are working to harness the power of these
Many small groups influence a person’s behavior. new social networks and other “word-of-web”
Groups that have a direct influence and to which a opportunities to promote their products and build
person belongs are called membership groups. In closer customer relationships. Instead of throwing more
contrast, reference groups serve as direct (face-to-face one-way commercial messages at consumers, they hope
interactions) or indirect points of comparison or to use digital, mobile, and social media to become an
reference in forming a person’s attitudes or behavior. interactive part of consumers’ conversations and lives.
People often are influenced by reference groups to Family
which they do not belong.
Family members can strongly influence buyer behavior.
Reference groups are those groups with which you like The family is the most important consumer buying
to be associated. These can be formal groups, such as organization in society, and it has been researched
members of a country club, church, or professional extensively. Marketers are interested in the roles and
group, or informal groups of friends or acquaintances. influence of the husband, wife, and children on the
These groups serve as role models and inspirations, and purchase of different products and services.
they influence what types of products you buy and
which brands you choose. Such shifting roles signal a new marketing reality.
Marketers in industries that have traditionally sold their
Marketers try to identify the reference groups of their products to only women or only men—from groceries
target markets. Reference groups expose a person to and personal care products to cars and consumer
new behaviors and lifestyles, influence the person’s electronics—are now carefully targeting the opposite
attitudes and self-concept, and create pressures to sex. Other companies are showing their products in
conform that may affect the person’s product and “modern family” contexts.
brand choices. The importance of group influence varies
across products and brands. It tends to be strongest Children also have a strong influence on family buying
when the product is visible to others whom the buyer decisions. A global survey showed that children— from
respects. babies to teens—wield particular influence over their
parents’ decisions regarding how money and free time
Marketers of brands subjected to strong group are spent (71 and 70 percent), where to go on vacation
influence must figure out how to reach opinion leaders (64 percent), how often to go out to eat (58 percent),
— people within a reference group who, because of and where to live (43 percent). Furthermore, the
special skills, knowledge, personality, or other majority of parents felt that their kids exert more
characteristics, exert social influence on others. Some influence on family purchases than they did themselves
experts call this group the influentials or leading when growing up.
adopters. When these influentials talk, consumers
listen. Marketers try to identify opinion leaders for their Roles and Status
products and direct marketing efforts toward them.
A person belongs to many groups—family, clubs,
Buzz marketing involves enlisting or even creating organizations, online communities. The person’s
opinion leaders to serve as “brand ambassadors” who position in each group can be defined in terms of both
spread the word about a company’s products. Over the role and status. A role consists of the activities people
are expected to perform according to the people People coming from the same subculture, social class,
around them. Each role carries a status reflecting the and occupation may have quite different lifestyles.
general esteem given to it by society. People usually Lifestyle is a person’s pattern of living as expressed in
choose products appropriate to their roles and status. his or her psycho graphics. It involves measuring
consumers’ major AIO dimensions—activities (work,
Personal Factors
hobbies, shopping, sports, social events), interests
A buyer’s decisions also are influenced by personal (food, fashion, family, recreation), and opinions (about
characteristics such as the buyer’s occupation, age and themselves, social issues, business, products). Lifestyle
stage, economic situation, lifestyle, and personality and captures something more than the person’s social class
self-concept. or personality. It profiles a person’s whole pattern of
acting and interacting in the world. When used
Occupation carefully, the lifestyle concept can help marketers
A person’s occupation affects the goods and services understand changing consumer values and how they
bought. Blue-collar workers tend to buy more rugged affect buyer behavior. Consumers don’t just buy
work clothes, whereas executives buy more business products; they buy the values and lifestyles those
suits. Marketers try to identify the occupational groups products represent. Marketers look for lifestyle
that have an above-average interest in their products segments with needs that can be served through
and services. A company can even specialize in making special products or marketing approaches. Such
products needed by a given occupational group. segments might be defined by anything from family
characteristics or outdoor interests to the foods people
Age and Life Stage eat.
People change the goods and services they buy over Personality and Self-Concept
their lifetimes. Tastes in food, clothes, furniture, and
recreation are often age related. Buying is also shaped Each person’s distinct personality influences his or her
by the stage of the family life cycle—the stages through buying behavior. Personality refers to the unique
which families might pass as they mature over time. psychological characteristics that distinguish a person or
Life-stage changes usually result from demographics group. Personality is usually described in terms of traits
and life-changing events—marriage, having children, such as self-confidence, dominance, sociability,
purchasing a home, divorce, children going to college, autonomy, defensiveness, adaptability, and
changes in personal income, moving out of the house, aggressiveness. Personality can be useful in analyzing
and retirement. Marketers often define their target consumer behavior for certain product or brand
markets in terms of life-cycle stage and develop choices.
appropriate products and marketing plans for each Psychological Factors
stage.
A person’s buying choices are further influenced by four
Economic Situation major psychological factors: motivation, perception,
A person’s economic situation will affect his or her store learning, and beliefs and attitudes.
and product choices. Marketers watch trends in Motivation
spending, personal income, savings, and interest rates.
In today’s more value-conscious times, most companies A person has many needs at any given time. Some are
have taken steps to create more customer value by biological, arising from states of tension such as
redesigning, repositioning, and repricing their products hunger, thirst, or discomfort. Others are psychological,
and services. Similarly, in line with worldwide economic arising from the need for recognition, esteem, or
trends, smartphone makers who once offered only belonging. A need becomes a motive when it is aroused
premium-priced phones are now offering lower-priced to a sufficient level of intensity. A motive (or drive) is a
models for consumers both at home and in the world’s need that is sufficiently pressing to direct the person to
emerging economies. seek satisfaction. Psychologists have developed
theories of human motivation. Two of the most popular
Lifestyle —the theories of Sigmund Freud and Abraham Maslow
— carry quite different meanings for consumer analysis organize, and interpret information to form a
and marketing. meaningful picture of the world.

Sigmund Freud assumed that people are largely People can form different perceptions of the same
unconscious about the real psycho logical forces stimulus because of three perceptual processes:
shaping their behavior. His theory suggests that a selective attention, selective distortion, and selective
person’s buying decisions are affected by subconscious retention. People are exposed to a great amount of
motives that even the buyer may not fully understand. stimuli every day. Selective distortion describes the
tendency of people to interpret information in a way
Consumers often don’t know or can’t describe why they
that will support what they already believe. People also
act as they do. Thus, many companies employ teams of
will forget much of what they learn. They tend to retain
psychologists, anthropologists, and other social
information that supports their attitudes and beliefs.
scientists to carry out motivation research that probes
Selective retention means that consumers are likely to
the subconscious motivations underlying consumers’
remember good points made about a brand they favor
emotions and behaviors toward brands.
and forget good points made about competing brands.
Such projective techniques might seem pretty goofy, Because of selective attention, distortion, and
and some marketers dismiss such motivation research retention, marketers must work hard just to get their
as mumbo jumbo. But many marketers use such touchy- messages through.
feely approaches, now sometimes called interpretive
Learning
consumer research, to dig deeper into consumer
psyches and develop better marketing strategies. When people act, they learn. Learning describes
changes in an individual’s behavior arising from
Abraham Maslow sought to explain why people are
experience. Learning theorists say that most human
driven by particular needs at particular times. Why does
behavior is learned. Learning occurs through the
one person spend a lot of time and energy on personal
interplay of drives, stimuli, cues, responses, and
safety and another on gaining the esteem of others?
reinforcement. A drive is a strong internal stimulus that
Maslow’s answer is that human needs are arranged in a
calls for action. A drive becomes a motive when it is
hierarchy. They include physiological needs, safety
directed toward a particular stimulus object.
needs, social needs, esteem needs, and self-
actualization needs. A person tries to satisfy the most Beliefs and Attitude
important need first. When that need is satisfied, it will
Through doing and learning, people acquire beliefs and
stop being a motivator, and the person will then try to
attitudes. These, in turn, influence their buying
satisfy the next most important need. For example,
behavior. A belief is a descriptive thought that a person
starving people (physiological need) will not take an
holds about something. Beliefs may be based on real
interest in the latest happenings in the art world (self-
knowledge, opinion, or faith and may or may not carry
actualization needs) nor in how they are seen or
an emotional charge. Marketers are interested in the
esteemed by others (social or esteem needs) nor even
beliefs that people formulate about specific products
in whether they are breathing clean air (safety needs).
and services because these beliefs make up product
But as each important need is satisfied, the next most
and brand images that affect buying behavior. If some
important need will come into play.
of the beliefs are wrong and prevent purchase, the
Perception marketer will want to launch a campaign to correct
them.
A motivated person is ready to act. How the person acts
is influenced by his or her own perception of the People have attitudes regarding religion, politics,
situation. All of us learn by the flow of information clothes, music, food, and almost everything else.
through our five senses: sight, hearing, smell, touch, Attitude describes a person’s relatively consistent
and taste. However, each of us receives, organizes, and evaluations, feelings, and tendencies toward an object
interprets this sensory information in an individual way. or idea. Attitudes put people into a frame of mind of
Perception is the process by which people select, liking or disliking things, of moving toward or away from
them. Attitudes are difficult to change. A person’s
attitudes fit into a pattern; changing one attitude may infrequent, or risky purchase but see little difference
require difficult adjustments in many others. among brands. For example, consumers buying
carpeting may face a high-involvement decision because
Module 4.2 BUYING DECISION BEHAVIOR carpeting is expensive and self-expressive. Yet buyers
may consider most carpet brands in a given price range
to be the same. In this case, because perceived brand
Types of Consumer Buying Behavior
differences are not large, buyers may shop around to
Buying behavior is not influenced solely by the external learn what is available but buy relatively quickly. They
environment. It’s also determined by your level of may respond primarily to a good price or purchase
involvement in a purchase and the amount of risk convenience. After the purchase, consumers might
involved in the purchase. There are four types of experience post purchase dissonance (after-sale
consumer buying behavior. discomfort) when they notice certain disadvantages of
the purchased carpet brand or hear favorable things
about brands not purchased. To counter such
dissonance, the marketer’s after-sale communications
should provide evidence and support to help consumers
feel good about their brand choices.

• Habitual Buying Behavior

Habitual buying behavior occurs under conditions of


low-consumer involvement and little significant brand
difference. For example, take table salt. Consumers
have little involvement in this product category—they
simply go to the store and reach for a brand. If they
keep reaching for the same brand, it is out of habit
• Complex Buying Behavior rather than strong brand loyalty. Consumers appear to
Consumers undertake complex buying behavior when have low involvement with most low-cost, frequently
they are highly involved in a purchase and perceive purchased products. consumer behavior does not pass
significant differences among brands. Consumers may through the usual belief-attitude-behavior sequence.
be highly involved when the product is expensive, risky, Consumers do not search extensively for information
purchased infrequently, and highly self-expressive. about the brands, evaluate brand characteristics, and
Typically, the consumer has much to learn about the make weighty decisions about which brands to buy.
product category. Because they are not highly involved with the product,
consumers may not evaluate the choice, even after
Marketers of high involvement products must purchase. Thus, the buying process involves brand
understand the information-gathering and evaluation beliefs formed by passive learning, followed by
behavior of high-involvement consumers. They need to purchase behavior, which may or may not be followed
help buyers learn about product-class attributes and by evaluation.
their relative importance. They need to differentiate
their brand’s features, perhaps by describing and Because buyers are not highly committed to any brands,
illustrating the brand’s benefits through printed marketers of low-involvement products with few brand
promotional materials or in-depth online information differences often use price and sales promotions to
and videos. They must motivate store salespeople and promote buying. Alternatively, they can add product
the buyer’s acquaintances to influence the final brand features or enhancements to differentiate their brands
choice. from the rest of the pack and raise involvement.

• Dissonance-Reducing Buying Behavior • Variety-Seeking Buying Behavior

Dissonance-reducing buying behavior occurs when Consumers undertake variety-seeking buying behavior
consumers are highly involved with an expensive, in situations characterized by low consumer
involvement but significant perceived brand differences. Consumers can obtain information from any of several
In such cases, consumers often do a lot of brand sources. These include personal sources (family, friends,
switching. Brand switching occurs for the sake of variety neighbors, acquaintances), commercial sources
rather than because of dissatisfaction. (advertising, salespeople, dealer and manufacturer web
and mobile sites, packaging, displays), public sources
In such product categories, the marketing strategy may
(mass media, consumer rating organizations, social
differ for the market leader and minor brands. The
media, online searches and peer reviews), and
market leader will try to encourage habitual buying
experiential sources (examining and using the product).
behavior by dominating shelf space, keeping shelves
The relative influence of these information sources
fully stocked, and running frequent reminder
varies with the product and the buyer.
advertising. Challenger firms will encourage variety
seeking by offering lower prices, special deals, coupons, Traditionally, consumers have received the most
free samples, and advertising that presents reasons for information about a product from commercial sources
trying something new. —those controlled by the marketer. The most effective
sources, however, tend to be personal. Commercial
Buyer Decision Process
sources normally inform the buyer, but personal
sources legitimize or evaluate products for the buyer.
Few advertising campaigns can be as effective as a next-
door neighbor leaning over the fence and raving about
a wonderful experience with a product you are
considering.
The buyer decision process consists of five stages: need
recognition, information search, evaluation of c. Evaluation of Alternatives
alternatives, the purchase decision, and post purchase Marketers need to know about alternative evaluation,
behavior. Clearly, the buying process starts long before that is, how consumers process information to choose
the actual purchase and continues long after. Marketers among alternative brands. Unfortunately, consumers do
need to focus on the entire buying process rather than not use a simple and single evaluation process in all
on the purchase decision only. Consumers pass through buying situations. Instead, several evaluation processes
all five stages with every purchase in a considered way. are at work. How consumers go about evaluating
But buyers may pass quickly or slowly through the purchase alternatives depends on the individual
buying decision process. And in more routine purchases, consumer and the specific buying situation. In some
consumers often skip or reverse some of the stages. cases, consumers use careful calculations and logical
Much depends on the nature of the buyer, the product, thinking. At other times, the same consumers do little or
and the buying situation. no evaluating. Instead, they buy on impulse and rely on
a. Need Recognition intuition. Sometimes consumers make buying decisions
on their own; sometimes they turn to friends, online
The buying process starts with need recognition—the reviews, or salespeople for buying advice.
buyer recognizes a problem or need. The need can be
triggered by internal stimuli when one of the person’s Consumers are said to view a product or service as a
normal needs—for example, hunger or thirst—rises to “bundle of product attributes,” and you evaluate
a level high enough to become a drive. A need can also several. attributes of a product or service in reaching
be triggered by external stimuli. your purchase decision

b. Information Search d. Purchase Decision

An interested consumer may or may not search for The consumer ranks brands and forms purchase
more information. If the consumer’s drive is strong and intentions. Generally, the consumer’s purchase
a satisfying product is near at hand, he or she is likely to decision will be to buy the most preferred brand, but
buy it then. If not, the consumer may store the need in two factors can come between the purchase intention
memory or undertake an information search related to and the purchase decision. The first factor is the
the need. attitudes of others. If someone important to you thinks
that you should buy the lowest-priced car, then the companies cannot simply wait for dissatisfied customers
chances of you buying a more expensive car are to volunteer their complaints. Most unhappy
reduced. The second factor is unexpected situational customers never tell the company about their
factors. The consumer may form a purchase intention problems. Therefore, a company should measure
based on factors such as expected income, expected customer satisfaction regularly. It should set up systems
price, and expected product benefits. However, that encourage customers to complain. In this way, the
unexpected events may change the purchase intention. company can learn how well it is doing and how it can
improve.
e. Post purchase Behavior

The marketer’s job does not end when the product is


bought. After purchasing the product, the consumer
will either be satisfied or dissatisfied and will engage in
post purchase behavior of interest to the marketer.
What determines whether the buyer is satisfied or
dissatisfied with a purchase? The answer lies in the
relationship between the consumer’s expectations and
the product’s perceived performance. If the product
falls short of expectations, the consumer is
disappointed; if it meets expectations the consumer is
satisfied; if it exceeds expectations, the consumer is
delighted. The larger the negative gap between
expectations and performance, the greater the By studying the overall buyer decision process,
consumer’s dissatisfaction. This suggests that sellers marketers may be able to find ways to help consumers
should promise only what their brands can deliver so move through it. For example, if consumers are not
that buyers are satisfied. buying a new product because they do not perceive a
need for it, marketing might launch advertising
Almost all major purchases, however, result in cognitive
messages that trigger the need and show how the
dissonance, or discomfort caused by post purchase
product solves customers’ problems. If customers know
conflict. After the purchase, consumers are satisfied
about the product but are not buying because they
with the benefits of the chosen brand and are glad to
hold unfavorable attitudes toward it, marketers must
avoid the drawbacks of the brands not bought.
find ways to change either the product or consumer
However, every purchase involves compromise. So
perceptions
consumers feel uneasy about acquiring the drawbacks
of the chosen brand and about losing the benefits of
the brands not purchased. Thus, consumers feel at least
some post purchase dissonance for every purchase.

Why is it so important to satisfy the customer?


Customer satisfaction is a key to building profitable
relationships with consumers—to keeping and growing
consumers and reaping their customer lifetime value.
Satisfied customers buy a product again, talk favorably
to others about the product, pay less attention to
competing brands and advertising, and buy other
products from the company.

A dissatisfied consumer responds differently. Bad word


of mouth often travels farther and faster than good
word of mouth. It can quickly damage consumer
attitudes about a company and its products. But
law firm or an accounting firm might order hundreds of
reams of copy paper, folders, and print cartridges from
Module 4.3 BUSINESS MARKETS AND BUSINESS BUYER Office Depot. That’s a B2B transaction.
BEHAVIOR

Business buyer behavior refers to the buying behavior


of organizations that buy goods and services for use in
the production of other products and services that are
sold, rented, or supplied to others. It also includes the
behavior of retailing and wholesaling firms that acquire
goods to resell or rent to others at a profit. In the
business buying process, business buyers determine
which products and services their organizations need to
purchase and then find, evaluate, and choose among
alternative suppliers and brands. Business-to-business
(B-to-B) marketers must do their best to understand
business markets and business buyer behavior. Then, • Nature of the buying decision. It may seem a little
like businesses that sell to final buyers, they must obvious, but it’s important to remember that B2C
engage business customers and build profitable buyers generally make buying decisions for
relationships with them by creating superior customer themselves or their households, whereas B2B buyers
value. make buying decisions for their companies, which
serve either consumers or other companies.
The business market is huge. In fact, business markets • Fewer buyers, higher volume. Another difference
involve far more dollars and items than do consumer between the two markets is that B2B markets deal
markets. with fewer buyers, who purchase a much higher
In some ways, business markets are similar to consumer volume than the B2C market
markets. Both involve people who assume buying roles • Direct demand versus derived demand. Another
and make purchase decisions to satisfy needs. difference between the two markets lies in the nature
However, business markets differ in many ways from of the demand for products. B2C markets are driven
consumer markets. The main differences are in market by direct demand, the demand for goods and services
structure and demand, the nature of the buying unit, for direct consumption purposes. By contrast, B2B
and the types of decisions and the decision process markets are driven by what’s known as derived
involved. demand, in that demand in the B2B market is dictated
by the demand for consumer goods on the B2C
Business-to-business (B2B) is a marketing transaction or market. For example, as more workers are working
business conducted between businesses. It refers to from their homes, the demand for computers has
businesses that sell products and/or services to other risen. As a result, you’ll see derived demand in
businesses, such as retailers or wholesalers, rather than computer-related products, such as mice, monitors,
to consumers. These transactions can include printers, and so on.
everything from materials used in manufacturing to • Longer buying cycles. As a general rule, the higher the
office supplies or furniture and everything in between. dollar volume of the sale and the more complex the
B2B’s “counterpart” is what’s known as B2C, or product, the longer it takes for the sale to be made. As
business-to consumer. The focus in B2C transactions is a consumer in the B2C market, you might buy a
selling products, goods, and services to consumers for desktop computer within a relatively short time after
personal use. deciding that you need a new computer. In the B2B
Many businesses have both B2B and B2C components. market, a hospital purchasing a magnetic resonance
For example, consider Office Depot. You may have imaging (MRI) machine may well be spending millions
stopped into an Office Depot store before the semester of dollars, and the sale can take months or even years
to stock up on pens, a ream of paper for your printer, or to accomplish. Not only will there be more people
notebooks. That’s a B2C transaction. However, a large involved in the decision-making process, but the
hospital needs to be concerned with many factors, services tends to change more— and more quickly—
such as safety, reliability, and post-purchase service. A than does the demand for consumer goods and
lot of time and effort is typically required to “close the services. A small per centage increase in consumer
deal” with a big-ticket item like an MRI machine. We’ll demand can cause large increases in business
be examining the stages in the B2B buying process in demand. Finally, business demand is derived demand
depth later in this chapter, but the B2B buying process —it ultimately derives from the demand for consumer
is typically longer and more complex, not only because goods. Therefore, B-to-B marketers sometimes
of the involvement of different decision makers, but promote their products directly to final consumers to
also because these decision makers must consider a increase business demand.
wide range of factors when making high-volume or
high-dollar purchases. Nature of the Buying Unit
• Reliance on personal selling. Whereas B2C markets Compared with consumer purchases, a business
tend to rely more heavily on mass marketing, B2B purchase usually involves more decision participants
markets typically are characterized by increased and a more professional purchasing effort. Often,
reliance on personal selling. Additionally, B2B business buying is done by trained purchasing agents
purchasing is more likely to involve complex who spend their working lives learning how to buy
negotiations concerning price, delivery schedules, better. The more complex the purchase, the more
technical specifications, etc., so personal selling plays likely it is that several people will participate in the
a vital role. Typically, because B2B buyers and sellers decision-making process. Buying committees
often need to work together to define problems and composed of technical experts and top management
implement solutions, they focus on building long-term are common in the buying of major goods. Beyond
relationships rather than a one-and-done purchase. this, B-to-B marketers now face a new breed of
• Geographical concentration. Finally, the scope of the higher-level, better-trained supply managers.
market is different. In the B2C market, you have Therefore, companies must have well-trained
millions of potential customers dispersed throughout marketers and salespeople to deal with these well-
a region, a country, or perhaps the world. On the trained buyers.
other hand, the B2B market is more concentrated.
The B2B market has far fewer customers that are Business Buying Behavior
often geographically concentrated in areas based on
cost, access, and availability of resources.

Market Structure and Demand


The business marketer normally deals with far fewer
but far larger buyers than the consumer marketer
does. Even in large business markets, a few buyers
often account for most of the purchasing. For
example, when Goodyear sells replacement tires to
final consumers, its potential market includes millions Within the organization, buying activity consists of two
of car owners around the world. But its fate in major parts: the buying center, composed of all the
business markets depends on getting orders from people involved in the buying decision, and the
only a handful of large automakers. buying decision process. The model shows that the
Further, many business markets have inelastic and buying center and the buying decision process are
more fluctuating demand. The total demand for many influenced by internal organizational, interpersonal,
business products is not much affected by price and individual factors as well as external environ
changes, especially in the short run. A drop in the mental factors.
price of leather will not cause shoe manufacturers to
buy much more leather unless it results in lower shoe Major Types of Buying Situations
prices that, in turn, increase consumer demand for There are three major types of buying situations. In a
shoes. And the demand for many business goods and straight rebuy, the buyer reorders something without
any modifications. It is usually handled on a routine
basis by the purchasing department. To keep the management software from still another vendor, etc.
business, “in” suppliers try to maintain customer and putting them together.
engagement and product and service quality. “Out” Participants in the Business Process Behavior
suppliers try to find new ways to add value or exploit The decision-making unit of a buying organization is
dissatisfaction so that the buyer will consider them. referred to as the buying center, sometimes called a
decision-making unit. Buying centers are comprised of
Straight rebuys are the simplest buying situation for a all of the different people in the organization who
B2B buyer. With a straight rebuy, the B2B buyer is have a stake in the B2B buying decision and have
making a routine purchase of a standard product or some degree of influence in the purchasing decision.
products with no modifications from a familiar
supplier. The initiator is typically the individual who first
identifies a purchasing need within the organization.
In a modified rebuy situation, the B2B buyer is looking Initiators are the people within the buying center who
to purchase a similar product, but there are one or start (or initiate) the buying process.
more significant differences from the previous
purchase, such as new product specifications or a new Influencers are those within the organization who help
supplier. Modified rebuy situations typically involve define specifications and/or provide information to be
more effort on the part of the B2B buyer than straight used in the evaluation process. Simply put, these are
rebuys because they have to consider product the people in the organization who influence the
specifications, evaluate vendors, and negotiate new buying situation and provide information for
contracts. A modified rebuy situation involves more strategically evaluating alternatives. Influencers may
effort than a straight rebuy situation because the not have a direct role in the purchasing decision, but
restaurateur is likely going to need to research they wield influence over the purchase. There are two
product specifications, evaluate vendors, and possibly categories of influencers. Business influencers typically
negotiate new contracts. focus on how the purchase impacts revenue, whereas
technical influencers will generally focus on how the
The new-task buy occurs when a B2B buyer buys a purchase will impact business processes and
product or service for the first time. These buying operations.
situations are among the most difficult and time-
consuming ones because typically the B2B buyer has Gatekeepers filter information. The gatekeeper is the
no previous experience with the product, the service, person the marketer has to negotiate their way
or perhaps the vendors. This means that, instead of through in order to reach the decision makers.
relying on past purchase orders or product Gatekeepers play a strategic role in the buying
specifications, the B2B buyer has to start from scratch process, because they have the ability to allow only
and do considerable research in terms of product that information favorable to their opinion to flow to
specifications, find out which firms supply the the decision makers.
product, and obtain information on the quality,
pricing, delivery, and customer service of each of Buyers are those who have authority within the
these vendors. organization to select suppliers and negotiate and
arrange the purchase terms. Buyers may also assist
Systems selling (sometimes called a solution sale) others within the organization to help shape product
involves buying a complete solution to a problem or specifications, but their primary role is selecting
need rather than purchasing separate components vendors and negotiating the terms of the contract.
from different vendors. For example, a B2B buyer may They are also responsible for issuing purchase orders,
choose to purchase an entire human resource following up, and keeping track of deliveries.
management system from one supplier rather than
purchasing applicant and/or employee management Deciders are the critical link for a marketer in getting
software from one vendor, payroll software from the order, particularly in major purchases. These are
another vendor, compensation and benefits the people within the organization who have the
authority to select or approve the final suppliers. B2B exchange rates (the value of one country’s currency
buyers may be the deciders for routine purchases versus another.)
(i.e., straight rebuys), but in more complex purchases, Competition also affects B2B buying behavior. It stands
decisions are often made higher up in the to reason that, when a competitor changes its product
organization. offering and garners more market share, a business
will want to respond by going on the defensive and
Users are those people within the organization who changing its product offering as well, triggering one or
will actually use the product or service. These users more B2B buying situations. The fast-food industry is
may or may not be the initiators of the purchase just one example of this.
proposal. However, depending on how complex the
purchase is, they may help define product Finally, the social environment influences B2B buying
specifications. behavior because each member of the class will likely
approach the situation armed with different
It’s important to note that not all of these parties may information, different perspectives, and perhaps
be involved in every buying decision, depending on different personal agendas.
the nature of the purchase, and sometimes people in
the buying center play more than one role • Internal Factors
Organizational factors are those factors internal to the
Major Influences on Business Buyer organization that affect buying decisions. Every
organization has certain business objectives and
goals, and goods and services should be purchased
according to these objectives

Consider how an organization’s technology influences


B2B buying behavior, particularly if the purchases
must be compatible with the technology that is
already in place in the organization. When purchasing
a new product or service, decision makers are often
reluctant to change the existing technology and go
• External Factors with something new.
External factors at work in the B2B buying decision can
be economic conditions, the political/legal Finally, workforce skills are as important as the
environment, competition, and the social decision makers and the products or services
environment. themselves since the workers are the ones who are
going to use the new equipment or service and
First consider economic factors, such as the level of (hopefully) will make the most of it. Thus, new
primary demand, the economic outlook, and the cost purchases must be compatible with the existing
of money (i.e., interest rates). When the economy is workforce skills, or employees must be offered
strong, when unemployment is low, and when training on the new technology,
personal income is up, B2C demand increases, driving
upward demand in the B2B market. Conversely, during • Individual Factors
economic recession, B2B buyers look for ways to cut Just as with consumers, B2B buying decisions are
costs, and buying is significantly reduced. influenced by the characteristics of the individuals in
the buying center. Consider just one factor: age.
Political and legal factors also influence B2B buying Millennials (i.e., those born between 1981 and 1995)
decisions. These factors include the political system, are generally the most optimistic about purchase
the political situation, and government policies. Legal decisions. A whopping 83% are confident that they are
factors include laws, rules, and regulations, including paying a reasonable price, and 97% believed that the
tariffs (which are taxes on imported goods) and vendor would deliver as promised. This compares to
only single digits for baby boomers (those born and cash is in short supply, it may decide to make a
between 1946 and 1964). purchase from suppliers who offer credit or may
The B2B buyer’s education also plays a role. A more choose to purchase a less expensive product that is
educated buyer is assumed to select goods and within its budget. Likewise, availability of the product
services carefully and approach the buying decision or service will play a significant role in the buying
rationally, whereas a buyer with less education may decision. An organization may choose to go with a
make the buying decision based on a hunch. supplier who can readily deliver the product or
service within the time constraints of the project, even
Job position typically conveys an individual’s status if the price is higher.
within the organization. Those individuals involved in
the buying decision who are higher up in the Business Buyer Decision Process
organization’s hierarchy may have more influence The B2B buying process—the journey B2B buyers and
than those with less formal authority within the the buying center take to complete a purchase—is
organization. significantly different and more complex than the
consumer purchasing decision process.
Those involved in B2B buying decisions are, after all,
human beings, so it stands to reason that personality
will play a role. Personality refers to an individual’s
distinctive patterns of thinking, feeling, and behavior,
and these factors will play a role in making buying
decisions
Stage 1: Problem Recognition. Similar to the consumer
purchasing decision process, the first stage in the B2B
• Interpersonal Factors
buying decision process begins when someone within
Business buying decisions are typically collective and
the organization identifies a problem or a need that
follow procedures established by the organization. The
can be resolved through a purchase. For straight
buying center usually consists of several individuals
rebuy purchases, this stage may be as simple as the
with different formal or informal authority, status
fact that the organization is running low on copier
within the organization, and technical expertise.
paper or toner. In a case like this, the B2B buyer
simply places the order, and the process ends.
If the buying situation involves a highly complex
Modified rebuy purchases make the process more
product or service, an individual with significant
complex, as these may involve replacing outdated
expertise will have and exert more influence in the
equipment, technological changes, or revising
buying decision. It’s also important to note that some
marketing brochures or advertisements. Now, instead
individuals in the buying center may have more
of placing an order from an existing supplier for an
influence than others, whether due to their position
already-purchased product, the B2B buyer has to
within the organization or their personal
follow through on more of the stages in the process.
persuasiveness.
New-task buying is the most complex.

Finally, organizational politics and culture may also


Stage 2: Need Description, Next, the buying center will
impact who the decision makers are and the degree of
need to further define what needs to be purchased.
power or influence they exert on the decision
This often involves collaboration among members of
process. Companies with a strong hierarchical
the buying center in terms of describing what is
structure may foster a tendency for decisions to be
needed from a technical perspective, desired
made at a higher level within the organization.
features, quantity, etc. Consider a firm that is
developing a new electronic control for an appliance.
• Conditional Factors
It stands to reason that the present financial condition
The components are many—a printed circuit board,
of the organization will play a large role in the buying
capacitors, resistors, microprocessors, etc. Members
decision. If the organization is financially struggling
of the buying center will be called upon to develop a
bill of materials—a list of parts, items, assemblies, and/or is extremely complex, or if many proposals
subassemblies, documents, drawings, and other were solicited, the buying center may narrow down
materials required to create the control. Think of the the list of vendors to just a few and invite them to
bill of materials as the “recipe” used to create the meet (either in person or virtually) to further discuss
finished product. the proposal and address any questions or concerns.

Stage 3: Product Specification. B2B buyers often Stage 7: Order-Routine Specification. After selecting
develop product specifications, a blueprint that suppliers, the B2B buyer negotiates the details of the
outlines the product to be built, how it will look, what order. The critical items here are what is needed (i.e.,
features it will have, and how it will function. The the technical specifications), how much is needed (i.e.,
product specification needs to be concise and the quantity required), and when it is needed (i.e., the
readable for everyone in the buying center and yet expected time of delivery). This stage will likely also
contain sufficient technical data to provide the include negotiation of things such as return policies,
product team with the information it needs to warranties, and other critical items involved with the
develop the new product or feature. purchase.

Stage 4: Supplier Search. Now that you’ve established Stage 8: Performance Review. Just as consumers
the technical specifications for the product, it’s time to evaluate purchases after they have made them, and
identify potential suppliers. This is where the similar to the way that your employer may conduct a
experience of those in the buying center comes into performance review to assess your job performance,
play, as they attempt to determine which suppliers the B2B buyer periodically reviews the performance
have the best quality, delivery, and price. Just like of the selected supplier to assess if the product and
consumers in the “information search” stage of the the supplier meet expectations.
consumer buying process, those in the buying center
may look online to find suppliers, but there are many
other resources available to B2B buyers, such as trade
magazines, industry expert blogs, and webinars
conducted by suppliers.

Stage 5: Proposal Solicitation. Once the list of


potential vendors has been developed and whittled
down, qualified vendors will be asked to submit
proposals. If it’s a relatively straightforward purchase,
this proposal may be as easy as a vendor sending the
buyer a catalog or providing the buyer with a link to
the company’s website. However, more complex
purchases typically require the vendor to submit a
detailed proposal outlining what the vendor can do to
address the company’s needs. This proposal will likely
contain product specifications, timing, and—of course
—pricing.

Stage 6: Supplier Selection. After reviewing the


proposals from the various vendors, the buying center
makes a choice. This stage in the B2B buying process
involves a thorough review of the proposals
submitted, with a critical eye tuned to factors such as
supplier capabilities, reputation, warranties, price, etc.
If the purchase requires a substantial financial outlay
connection, with the expectations of the customer.
Module 2 Discovering Customer Relationship or CRM This means that if the performance of the product
does not meet the expectation of the customer, he
will be dissatisfied and may switch to their brands that
Nowadays, having a good relationship with the will satisfy his expectations.
customer and offering great value are both important
elements in attaining and maintaining a good position The learners of marketing should remember that
in the market. Most of the e customers today really company must provide products or services that will
values their money spent for products or services and meet both the perceived value and performance of
reviews their relationship with them. the customers to achieve total satisfaction.

As defined by Kotler and Armstrong, CRM is “the Module 2.2 DEFINING RELATIONSHIP MARKETING
overall process of building and maintaining profitable
customer relationships by delivering superior The concept of relationship marketing is very vital in
customer value and satisfaction.” getting customers loyalty and establishing and
maintaining a long lasting relationship. Hence,
Marketers believe that CRM helps the company in relationship marketing is a set of activities designed to
gaining, maintaining and increasing market share. develop and manage customer loyalty and long-term
customer relationship.

The relationship marketing teaches companies and the


customers to build trust by having interactions, which
will result in lasting relationship. In this concept, both
the buyer and seller are essential components in the
process. The seller should communicate to the buyer
that he is not just selling a product to make a sale. The
The very foundation of a lasting customer relationship seller should make the customer feel that his needs
relies on the customer value and customer are important and should take care. Moreover, even
satisfaction. It has been said loyal customers are after sales, the seller must continue to provide the
satisfied customers. If a brand satisfies the needs of client with information and service.
the customer I terms of the value of the product and
quality of the service, there is a great possibility that Hence adopting the concept of relationship marketing,
the customer will give his loyalty to the brand. And if it is wrong to say that the process ends after a
it this will be the case, the company will enjoy a larger customer buys the product. Feedback and follow-
share of the market. through using related products and service are
outstanding.
However, in reality, there are many competing brands
in the market that the consumers are facing everyday. Advantages of Having a Strong Relationship
Therefore, getting the attention and retention of the Marketing
customers is not an easy task. Customers pick • Maintain long-term relationship. By building a
products, which they think offer utmost value. This relationship with customers and not treating them just
process is called customer-perceived value. for the sales, the loyalty of the customers will be
developed and the likelihood of patronizing the
Customers may subjectively see the value and cost of product for extended time increases.
the product. Their selection of products and services
will be based on their individual value perspective. • Receive referrals from potential customers. Amidst
. the different channels of promotion, the word of
Customer satisfaction, on the other hand, is based on mouth is still one of the best means of promotion.
the perceived performance of the product in The testimonials and recommendations of the
satisfied and loyal customers are powerful persuasive product and service features and benefits. The
tool to influence their families, friends and colleagues. marketers conduct market research to have a basis of
Thus, a seller has established good relationship product development plan. The market researchers
marketing, may likely to receive more referrals from generate or gather views, thoughts, or opinions of the
satisfied and loyal customers. customers and turning it into a useful data, which is
treated with a large importance in producing and
• Provides feedback mechanism. It will be easier for the improving the products or services regarding its
seller to get feedback from customers who are pricing, distribution, and communication efforts.
satisfied and loyal. Getting the complains of the
customers is a form of feedback. It is essential that The thoughts, words, opinions, and conversations with
sellers know how to receive complaints by making the customers, may t be the informal way (face to face or
customer feel that his complaint is properly attended. social media blog) or a constructed way (research),
This will help companies to solve problems and show has a significant role in shaping the brand. Ergo, the
service commitment to public. This, the feedback will customer, is a vital marketing force.
help the company to improve the product or the
service it offers. Relationship Development Strategies
The companies utilize different strategies in developing
• Gives competitive edge. Having satisfied and loyal relationship with their customers. Here are come ways
customers means having certain captured market. This to establish customer relationship.
will provide the company a competitive advantage According to levels
regarding market share. Basic relationships. Companies with having identified
many low-margin target customers often utilize this
approach. With this kind of relationship, marketers
Understanding the Value of the Customers in Marketing establish a relationship with their customers through
brand advertisements, publicities, public relations
Through the years, marketers have realized the value of activities and social media.
customers in the marketing process. Having strong Full-part partnership. Companies with having identified
customer relationships makes the business more few and high margin target customers sort to this kind
profitable in the long run. This is perhaps the reason of relationship. Markets create a relationship by
why marketers develop different approaches to working actively with the principal customers like
building and maintaining healthy relationships with the large retailers or distributors.
customers. According to marketing tools
Frequency marketing program. Most of the companies
One of the great values of clients in marketing is being use this kind of approach in establishing and
the advocate of the products or service themselves. maintaining a relationship with customers. Usually,
This is very common in viral marketing. New marketers provide loyal customers who regularly buy
customers by products or services because of the goods or services in big amount with rewards in a
words they get from the satisfied and loyal form of points, discounts, freebies, coupons, and gift
customers. Their testimonials are so powerful certificates.
compared to the traditional promotional tools that Club marketing programs. Sometimes companies
companies are commonly used. Their words spread provide sponsorships for clubs, which give special
fast from one person to probably multiple receivers. benefits to members and form member communities.
Their words spread fast from on person to probably Many companies today do this type of relationship.
multiple receivers. It can be through face-to-face Usually, the company is the one that initiates the
communication like small talks with friends or a formation of the club and recruits loyal customers to
channel like in the social media. be a member by issuing membership cards.

Another value of a customer in marketing is being the Many marketers believe that relationship is a
source of information in developing or improving the continuous process of knowing the customers,
identifying the things that will truly satisfy them to
strengthen the mutual bond between the seller and
the buyer.

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