Buying Process, analyzing consumer markets

BUYING PROCESS

CHAPTER 6: ANALYZING CONSUMER MARKETS
What influence customer behavior?

• Cultural factors: religion, nationality, geographic regions, social classes ((1) lower lowers, (2) upper lowers, (3) working class, (4) middle class, (5) upper middles, (6) lower uppers, and (7) upper uppers)
• Social factors: reference group (music, mode, leader), family, roles and statues.
• Personal factors: age and stage in the life cycle, occupation and economic circumstances, personality and self concept, life-style and values,

Key psychological processes

• Motivation:

• Freud: to understand hidden motivations
• Maslow: pyramid of needs. Particular needs in particular times.
• Herzberg: the absence of dissatisfiers is not enough; satisfiers must be present to motivate a purchase

• Perception

• Selective attention: to be attracted by special ads concerning special needs
• Selective distortion: fact to distort some special points
• Selective retention: fact to remember some special points
• Subliminal perception: consumers are not consciously aware of these messages, but yet they affect their behavior.

• Learning

• When people act, they learn. Learning involves changes in an individual's behavior arising from experience.

• Memory

• Short term memory
• Long term memory
• Memory influences act. An ad can remember you something you heard or something else and make you react.
• The aim of a brand is to be included in the “long term memory” of consumers.

• Memory encoding: how and where are information registered
• Memory retrieval: how information gets out of memory

The buying decision process: the five-stage model

• Problem recognition: recognition of a problem or a need that can be triggered by external (ad, neighbors’ new car) or internal (hunger, sex,) stimuli.

• Information search:

• Heightened attention: consumer becomes more receptive
• Active information search

• Personal: family, friends, neighbors
• Commercial: ads, sellers, web sites
• Public: mass media, consumer rating organization
• Experiential: handling, examining, using the product

Total set → Awareness set → Consideration set → Choice set → Decision

IBM                IBM                        IBM                IBM                ?
Apple                Dell                        Apple                Apple
Dell                HP                        HP                HP
HP                Apple                        Dell
Toshiba        Toshiba
MSI
NEC

• Evaluation of alternatives

• Evaluation of benefits of the products: price, advantages…
• Beliefs and attitudes
• Expectancy value model
• What waiting for a product

• Purchase decision

• Brand
• Dealer
• Quantity
• Timing
• Payment

• Postpurchase behavior

• Postpurchase satisfaction: to be or not to be happy to have bought the product
• Postpurchase actions: to “rebuy” the product or the brand, to advise some friends to buy this product or brand…
• Postpurchase use and disposal

Other theories of consumer decision making

• Level of consumer involvement
• Decision heuristics and biases
• Mental accounting
• Profiling the customer buying decision process

CHAPTER 7: ANALYZING BUSINESS MARKETS
What is Organizational buying?

How do formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

Differences between Business markets and consumer markets

• Fewer and larger buyers

• Close supplier-customer relationship: link between buyer and seller, a buyer can become a seller for his buyer…

• Professional purchasing: to buy better company are paying people to do every search a simple consumer would not do, or not always.

• Several buying influences: the decision is taken by several people, team, and steps of the hierarchy.

• Multiple sales call: it can take a lot of time before the finale decision
  
• Derived demand: companies are buying in function of the consumer demand. During a crisis, consumers are buying less, so companies do the same.
  
• Inelastic demand: the price does not influence the purchasing of a company. If it needs some goods it will buy it, and then sells it more expensive. But it will not reduce their purchasing.
  
• Fluctuating demand: The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce the additional output. Economists refer to this as the acceleration effect.
  
• Geographically concentred buyers: to reduce selling costs.
  
• Direct purchasing: no (or less) intermediaries during the purchasing process.

3 types of buying situation

• Straight rebuy: the supplier tries to keep the quality and just to improve his service or product to sell it to its consumer and make him win time. There is continuity, always the same supplier for the consumer.

• Modified rebuy: the supplier changes some things (products, prices) to respond to some competitors for example.

• New task: it’s the first purchase of a company and its decision will be variable in function of the price, the dealer, the risk… Here is the job of the seller very important as the communication, the post purchase behavior…

Systems buying and selling

• One purchase to one seller: a good way to negotiate costs and to be sure that the job is well done.

Participants in a buying business process

• The buying center, composed of:

• Initiators
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers

• Buying center influences

• “keep it simple” buyer
• “own expert” buyer
• “want the best” buyer
• “want everything” buyer
• To define criteria and to choose the “best” seller

• Buying center targeting

• Who are the major decision participants?
• What decisions do they influence?
• What is their level of influence?
• What evaluation criteria do they use?

• 4 types of business costumers

• Price oriented customers: price is everything.
• Solution oriented costumers: low cost but it depends on the product
• Gold-standard costumers: quality is everything
• Strategic-value customers: ? ?

The purchasing/Procurement process

• Company purchasing orientation:

• Buying orientation: using the compete to get the best price for the best product (using several sources)

• Procurement orientation: negotiate long-term contract, develop collaborative relationships.

• Supply chain management orientation: Here purchasing's role is further broadened to become a more strategic, value-adding operation. Purchasing executives at the firm work with marketing and other company executives to build a seamless supply chain management system from the purchase of raw materials to the on-time arrival of finished goods to the end users.

Types of purchasing Processes

Stages in the buying process

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