Chapter 11: Understanding Customers

User

may have little input into purchasing decision although they will be using the product once it is purchase to make sure it is effective and efficient

Descriptive research

most common type that involves counting numbers of respondents who have certain characteristics or behaviors ex surveys

New task buy

most complex buying situation for a business--the business has never purchase this good or service and does not have an existing set fop product specifications nor a preferred supplier list, usually takes the most time and involves the largest number of individuals, most riskiest

Three types of business buying decision

new task buy, modified rebuy, and straight rebuy

Modified rebuy

occurs when a business has previously purchased a product but must resist the product specifications due to a change in circumstances. Promotes reevaluation of the existing product specifications and vendor list

A business-to-business (B2B) transaction

occurs when a business sells products to another business

A business-to-consumer transaction

occurs when a business sells products to consumers

undifferentiated targeting strategy

one for which a marketer chooses to avoid the segmentation process and thats the total market as a single segment, not really common in today's age

The biggest difference between the business and consumer decision processes is that:

only businesses work from a formal preferred supplier list.

Buying center

an informational group of individuals that together make a business buying decision, composed of different roles

Product position

marketing organization makes effort to establish a unique place in the minds of its target market, relative to competitors

Gatekeeper

may be difficult to identity but controls access to the information and/or the decision-maker

Purchase decision stage

may decide not to purchase and revert back to beginning stage or decide to buy the product

Data collection

addresses carrying out the research design by deciding the exact collection procedures that will produce the type of information required.

Consumer decision process

1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase evaluation

The buying decision process

1. Problem recognition 2. Product specifications 3. Search for and evaluation of suppliers 4. Product and supplier selection 5. Evaluation of product and supplier performance

Steps of market segmentations

1. Selection of industry/product category/market 2. Identification of segmentation bases 3. Profile and analysis of segmentation bases 4. Selection of target market(s) 5. Development of marketing mix for each identified target market

Which of the following is an example of a B2B transaction?

A Best Buy associate sells a home theater system to the manager of an IT company.

Segmentation includes asking the questions:

Are there enough potential buyers in the segment?, will customers in the segment be accessible or can we reach them with our communications?, and will customers int he segment response differently to different marketing efforts?

Which one of the following statements is true when comparing business purchases to consumer purchases?

Compared to consumer purchases, business purchases are usually more complex, are more likely to be made by professional buyers, and have to be approved by committees and management.

A new task buy is the least complex buying situation for a business.

False

The purchaser in the buying center group is the individual who does not have the authority to sign off on the purchase agreement.

False

When a business sells products to consumers, the transaction is called business-to-consumer, or B2B

False

Which of the following is NOT one of the segmentation bases for business market segmentation?

Home address

Which one of the following is NOT used effectively as a base for segmenting business markets?

Lifestyles

Marketing research process

Problem definition, secondary research, research objectives, developing hypotheses, design of appropriate research methods, data collection, data analysis, marketing research, and follow up

A modified re-buy occurs when a business has previously purchased a product, but must revisit the product specifications due to a change in circumstances

True

An influencer is anyone inside or outside the business that can exert influence on any one of the buying center members.

True

Business buyers can be categorized into four types: producers, resellers, government, and institutions

True

Business buyers can be categorized into four types: producers, resellers, government, and institutions.

True

Customers who are the end users of the product, referred to as consumers, purchase products for their own use.

True

In business buying, a product purchase usually involves a set of specifications that have been determined by a purchasing manager or a buying group.

True

Making attempts to reduce the feeling of buyer's remorse, marketers frequently address a buyer's post-purchase evaluation through promotional efforts like follow up phone calls or e-mails.

True

Producers are businesses that manufacture goods or provide services.

True

The decider is frequently the highest-level management person involved in the decision.

True

Three types of business buying decisions are common: new task buy, modified re-buy, and straight re-buy.

True

Unlike consumers purchasing products for themselves, business buyers make purchases in the process of carrying out their business functions.

True

When Toyota introduced the Prius to environmentally-conscious consumers, it had to address several questions to determine if it was economically feasible to target this particular segment. Which one of the following is NOT one of the feasibility questions to ask about the target market?

Will suppliers be able to provide enough component parts?

Cognitive dissonane

a feeling of uncertainty about whether or not they made the right choice

Post purchase evaluation

added by marketers through promotional efforts like follow-up phone calls or emails

Influencer

anyone inside or outside the business that can exert influence on anyone of the buying center members, may or may not have direct input into the decision, rather, the input could be indirect through another member of the buying center

Differentiated target strategy

attempts to satisfy the broader marketplace by identifying multiple market segments to target, building a unique marketing mis to appeal to each segment ex. Toyota

customers who may also be _____ are ones who purchase products with the intention of either using that product in the production of another product or reselling it for a profit

business buyers

Producers

businesses that manufacture goods or provide services

Decision making process for business buyers:

can be constrained by committee process, managerial input, budgets, size of purchase, conflicting needs and goals, a buying department, and demands of other business activities

One-to-one marketing

can be described as tailoring a marketing mix to appeal to a single customer ex. www.makeyourownjeans.com

Data analysis

can include several steps but means that the researcher is processing the data collected in the previous step to put it in a form that allows interpretation and the assignment of meaning to the numbers, should match the analysis to the research objectives in step 3

Market segmentation

companies that employ a series of planning steps which help narrow the scope of market in order to target market efforts to appeal most effectively

Total market

composed of customers and potential customers who meet the criteria of ability, willingness, and authority. who can afford, have the freedom, and have the title to purchase the product

customer who are the end users of the product who purchase products for the town use are called

consumers

Profiling different types of potential customers in a given market segment can provide rich description that helps a business

develop an appropriate marketing mix

The Gap Corporation owns Old Navy, The Gap and Banana Republic. When The Gap Corporation chooses to target these three well-defined markets and develops a unique marketing mix to appeal differentially to each, it is using a(n) ________ targeting strategy.

differentiated

Developing hypotheses

educated guessed about how to solve the problem or exploit the opportunity defined in step 1

Routine response behavior

ex. purchasing a soft drink, preferences come into play and as long as the preference is available the consumer will continue to purchase it.. if the product is not available the consumer may chose an alternative or none at all which could affect the loyalty of the costumer if the product continues to be unavailable

Problem recognition stage

ex. realizing your current laptop is outdated and you are in need of a new one

Problem definition

first step, problem doesn't have to be negative, purpose of market research

Consumers purchase products:

for their own personal use and for their families' use.

Decider

highest-level management and will have budgetary responsibility for the purchase but can delate the decision to another member, this individual must take all responsibility

Institutions are important buyers of business products and include example like

hospitals, schools and correctional facilities

Segmentation, targeting and positioning (STP)

how business choose customers and establish space in the marketplace

Target market

identified market segment on which a company will focus its marketing effort, critical strategic step for an organization that influences how resources will be allocated and how the marketing mix will be created

Limited problem solving

in the middle of the decision continuum, when consumer are familiar with the product, but prefer to compare brands and stores before making purchase--buying clothes, furniture and small appliances

Design of appropriate research methods

includes exploratory research, descriptive research, and casual research

Niche market

includes only those specific customers who would enjoy a particular product

Purchaser

individual who has the authority to sign off on the purchase agreement, often carries the titles of purchasing manager or buyer and may or may not be closely involved in the actual decision process. Gives power to veto or add to any purchasing decision made by the buying center

Overall market can be referred to as

industry or product category

Exploratory research

information gathering that take place in the preliminary stages of marketing research and may be used in preparation for developing a project to address specific questions ex. focus groups

Secondary research

information that has already been gathered, step must be completed before collecting primary data. May be internal much of the info is collected and reported by government agencies or by industry trade associations

Influences on consumer decision-making

internal variables: demographic characteristics, stage of family life cycle, personality traits, lifestyle factors, psychological dimensions, motivations and structure of beliefs and attitudes. External variables: social and cultural factors like values, subculture, reference groups and family

Government of all levels

is one of the biggest purchases of B2B goods and services. ex. purchases equipment and clothing to outfit the military

Follow up

last step in marketing process and is often overlooked, ensures the research report includes action steps that can be implements and monitored to achieve the greatest success

Research objectives

outline what the primary data collection should discover in specific points, should be addressed when research method is designed and the data collection should not seek information beyond the set of research objectives that has been agreed upon

A product's position is best defined as the target market's ________ a product relative to ________.

perception of, competition

Customers perceptions of competitors in the marketplace relative to one another usually shown on a

perceptual map-- use attribute that are more important to customers

Wild Oats Market makes every effort to be a high quality grocery store. It sells organic produce, top grade cuts of meat, and fine wine. The store has a beautifully decorated interior with soft lighting and classical music. Employees are well trained to provide excellent customer service and wear attractive chef aprons. These decisions made by Wild Oats emphasize its:

positioning strategy.

Casual research

predictive and attempts to explain cause-and-effect relationships ex. conducting experiments that control variable so prediction can tell what variable impacted the other

Business usually works from a

preferred supplier list or companies that the business has previously purchased from and has investigated for product quality and financial stability

Types of business buyers

producers, resellers, government and institutions

Marketing mis

product, price, promotion and place 4Ps

In the ________ stage of the Consumer Decision Process, the buyer may decide not to purchase the product and stop the decision process or go back to a previous stage.

purchase decision

Information search stage

researching different brands, qualities of those brands, and promotional offers that make affect the final purchase decision

Business buyers that add value to products by providing transportation, storage, financing, and other services are called ________

resellers

Marketing results

results are typically presented both orally and in written report, often complex

Types of consumer decisions

routine response behavior, limited problem solving or extended problem solving

Consumer markets and business markets require a different set of

segmentation bases

Concentrated targeting strategy

selects a single segment of the market on which it focuses all of its marketing efforts, different from Differentiated because the segmentation process is used to identify a niche market

Straight rebuy

similar to the consumer's routine response where the business while automate straight rebuts so that a reorder is placed as soon as the product inventory reaches a certain point, or when it reaches a certain amount of time since the last order such as an order that is placed during the first week of every month

unlike consumer buying a purchase in business buying usually involves a set of

specification, which are determined by a purchasing manager or buying group

The result of a segmentation analysis should be the selection of one or more ____________ markets

target

The result of a segmentation analysis should be the selection of one or more ____________ markets.

target

Products position

the "unique place" and important component of the business's competitive advantage

Extended problem solving

the purchase decision carries a high level risk and is one that the consumer is willing to invest both time and effort

A(n) ________ targeting strategy is one for which the marketer chooses to avoid the segmentation process and treats the total market as a single segment.

undifferentiated

A firm can choose three different targeting strategies

undifferentiated, differentiated, or concentrated

External search

when a consumer may seek additional info by going to websites, consulting consumer reports and asking friends for advice

Internal search

when you think about what you already know about computer brands and models

Salesperson must be detective in order to find out

who player are in decision and the significance each individual's input in making the sale

Resellers

wholesalers, distributors and retailers, provide transportation, storage, financing and a variety of other value-added activities

Evaluation of alternatives stage

yielding a group of computers that comprise your consideration set, an important place for a brand to be, the time period allowed to this stage depends on the level of risk attached to making the purchase decision