MKT320F Unit 3

B2B Markets

-Fewer customers -larger value transactions -customized products -negotiated price -lengthy, complex selling process -usage determines value -multiple buying decision-makers -derived command (The demand for industrial products and services is driven by demand for consumer products and services)

B2B marketing components (four basic elements)

-Market Selection -Pricing -Distribution -Communication

Marketers determine whether a person's buying process is cognitive, emotional, or both through considering factors

-Product type; utilitarian purpose, ego expressive or hedonic, search vs experience good -Context; how the product will be used -Individual differences; right/left brain

consumer vs organizational purchase decisions

-The process through which organizations make a purchase decision is almost always more complex than the decision process for consumers -there's more people directly involved in the process with various roles and points of influence -decision making is more methodical -the process is generally more formalized

The value proposition

-key to communicating benefits to buyers, because it uses the customer's own language to do so -most effective type of value proposition in business markets is known as resonating Focus (focuses on a small number of benefits that motivate the customer and that are superior compared with the next best alternative provided by a competitor)

B2C Markets

-many customers -smaller value transactions -mass-produced products -fixed-price -brief, retail-focused selling process -multiple factors influence value -individual buying decision maker -media stimulated demand

Key influences on how buyers make decisions

-types of purchase being made -what stage they are in the buying process

Three types of value proposition

All benefits -The simplest value proposition is a list of every benefit that might appeal to customers -requires little or no knowledge of buyer's or competitors (easy for marketers to construct an equally easy for prospects to ignore) Favorable points of difference -focuses on the benefits that differentiate an offering from the competition -requires knowledge of Market alternatives -the resulting value proposition may be generally distinctive, but without importance to any specific buyer Resonating focus -one or two points of difference whose Improvement will deliver the greatest value to the customer for the first time -requires knowledge on how our own market offering delivers Superior value to customers, compared with the next best alternative

Compensatory vs noncompensatory decision making

Compensatory decision making; Consumers consider all attributes that are relevant, making trade offs between those attributes, Products shortcomings on particular attribute can be compensated for by its strengths of another attribute (price that is high compensated for by the exceptional styling) Noncompensatory decision making; Product's failure to reach an acceptable threshold on one attribute cannot be compensated for by high performance on another attribute

Consumer vs. business markets

Consumer Market has large numbers of customers, often with similar wants Business markets typically have fewer customers, and many of these customers expect a customized product, application, or price

B3B segments based on

Demographics -industry, size, location Operating variable -technology, user/ nonuser status, customer capabilities purchasing situations -urgency, quantity, product application customer economics -profitability, cost to serve and/ or buyer characteristics -personalities, pre-existing relationships, power structures

Emotional decision making

Driven by the heart and entailing a subjective liking for one option over another

the benefit typology

Economic, tangible benefits -can be readily measured, verified, and Quantified in terms of price performance -Focus on comparing with current alternatives available to customer show (Superior price to Performance) -Easy to communicate Non-economic, tangible benefits -vendor reputation, scale of operation, or specialized capabilities that can command premium prices and brand preferences -focus on building Market reputation and brand image -costly and time-consuming to create a non-economic tangible benefits (image and reputation) Economic, intangible benefits -those that the vendor claims to be quantifiable, but nonetheless seem unverifiable by the customer, at least in short-term -Burden of proof is on the vendor; typical approaches: Benchmark studies, pilot tests, or guarantees to offset customer risk Non-economic, intangible benefits -include qualities such as trustworthiness or conscientiousness -Customers can substantiate such benefits by experiencing them -can strongly influence value perceptions and have the power to create, sustain, or repair long-term relationships -not a viable option for acquiring customers, but the glue that holds buyer or seller relationships together over time

Both cognitive and emotional decision making

Example: Smartphone purchase -Cognitive Base price, cost of service plan, make and model -Emotional Is it considered cool, favorite color, personalization

High involvement vs low involvement decision making

High involvement -Buyer is fully engaged, decision making tends to be effortful, time frame relatively long, consequences of making a good vs bad choice is significant and visible. Low involvement -Require far less effort, happen quickly, far lower risk, Due to low cost or routine

Cognitive decision making

Many purchases are primarily cognitive. Driven by the mind, deliberative, information based processing of relevant product characteristics -Often slower, more systematic, and more exhaustive Example: buying insurance

Optimizing vs "satisficing" decision making

Optimizing decision making; Assume consumers are always motivated to purchase the best alternative they can Satisficing decision making; Process whereby consumers settle for an alternative that is good enough or passes some acceptable threshold

The consumer decision making process

Phase 1: Pre-Purchase - recognition of need -Search for viable alternatives to satisfy that need -Collection of information about alternatives Phase 2: Purchase -Making choices about which brand to buy, whom to buy it from, how many items of the offering to buy, when to buy, and how to pay. Phase 3: Post purchase -buyer's remorse? -consumers whoa re happy are likely to buy again and spread positive word of mouth -how consumers will eventually dispose of products.

Consumer and Business marketing behavior

Purchase decision categories -Need recognition (Recognize they have a need they need to fulfill) -Information search (Search about that need and what products and services might work best) -Evaluation of alternatives (Which product or service might be the very best) -Purchase -Postpurchase behavior (How the purchase stand up what they were hoping for)

Organizational Buying Center (OBC)

differs by: Structure -includes its size -it's level of formalization -degree of centralization Involvement -lateral involvement (number of departments or other work related groups involved in the purchase decision) -Vertical involvement (indicates the number of management levels involved in the decision) -Relative influence (which participants take a lead role in the decision)

Three general types of purchases that term-18B2B organizations make

straight rebuys -routine reorders from current vendors of low or no risk items like office supplies -these decisions may be made with little or no consultation among OBC members modified rebuys -occur when an organization decides to alter the specifications or purchasing terms for a product it is already using or has used in the past -may choose to negotiate with a current vendor or it may consider switching vendors -moderate risk situation new tasks -when an organization considers purchasing something it has never used before -involves considerable risk; may be difficult and time-consuming to identify and evaluate potential Solutions -requires the largest number of OBC participants

The consumer decision making unit

the set of individuals who affect, influence, and or take part in a decision to buy

Business-to-business transaction

when a business markets is goods or services to another business and/ or to governments or nonprofits