mrkt 341 chatper 5

Types of decisions

-More complex buying decisions -Large sums of money -Complex technical and economic considerations -Interactions among people at many levels of the buyer's organization

New Task

A business buying situation in which the buyer purchases a product or service for the first time. . In such cases, the greater the cost or risk, the larger the number of decision participants and the greater the company's efforts to collect information. The new task situation is the marketer's greatest opportunity and challenge. The marketer not only tries to reach as many key buying influences as possible but also provides help and information. The buyer makes the fewest decisions in the straight rebuy and the most in the new task decision.

Strait Rebuy

A business buying situation in which the buyer routinely reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. To keep the business, "in" suppliers try to maintain customer engagement and product and service quality. "Out" suppliers try to find new ways to add value or exploit dissatisfaction so that the buyer will consider them.

Modified Rebuy

A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. the buyer wants to modify product specifications, prices, terms, or suppliers. The "in" suppliers may become nervous and feel pressured to put their best foot forward to protect an account. "Out" suppliers may see the modified rebuy situation as an opportunity to make a better offer and gain new business.

Person factors

A buyer's decisions also are influenced by personal characteristics such as the buyer's occupation, age and life-cycle stage, economic situation, lifestyle, and personality and self-concept. -Age and life cycle stage -Occupation -Economic situation -Lifestyle -Personality and self-concept

New Product

A good, service, or idea that is perceived by some potential customers as new.

Subculture

A group of people with shared value systems based on common life experiences and situations. Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments, and marketers often design products and marketing programs tailored to their needs. Examples of three such important subculture groups are African American, Hispanic American, and Asian American consumers.

Motive

A need that is sufficiently pressing to direct the person to seek satisfaction.

Roles and Status

A person belongs to many groups—family, clubs, organizations, online communities. The person's position in each group can be defined in terms of both role and status. A role consists of the activities people are expected to perform according to the people around them. Each role carries a status reflecting the general esteem given to it by society. People usually choose products appropriate to their roles and status. Consider the various roles a working mother plays. In her company, she may play the role of a brand manager; in her family, she plays the role of wife and mother; at her favorite sporting events, she plays the role of avid fan. As a brand manager, she will buy the kind of clothing that reflects her role and status in her company. At the game, she may wear clothing supporting her favorite team.

Opinion Leaders

A person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others Marketers of brands subjected to strong group influence must figure out how to reach opinion leaders—people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert social influence on others. Some experts call this group the influentials or leading adopters. When these influentials talk, consumers listen. Marketers try to identify opinion leaders for their products and direct marketing efforts toward them.

Economic Situation

A person's economic situation will affect his or her store and product choices. Marketers watch trends in spending, personal income, savings, and interest rates. In today's more value-conscious times, most companies have taken steps to create more customer value by redesigning, repositioning, and repricing their products and services. For example, in recent years, upscale discounter Target has put more emphasis on the "Pay Less" side of its "Expect More. Pay Less." positioning promise. Similarly, in line with worldwide economic trends, smartphone makers who once offered only premium-priced phones are now offering lower-priced models for consumers both at home and in the world's emerging economie

Occupation

A person's occupation affects the goods and services bought. Blue-collar workers tend to buy more rugged work clothes, whereas executives buy more business suits. Marketers try to identify the occupational groups that have an above-average interest in their products and services. A company can even specialize in making products needed by a given occupational group. For example, Duluth Trading Company makes rugged, durable work clothes with a "no-bull" guarantee. From its "Ballroom Jeans" that give you "room to crouch without singing soprano" to its "Longtail T-shirts" that fix your "plumber's butt," Duluth's products are designed and tested by tradesmen. "Taking care of working guys is priority #1 at Duluth," says the company.

Lifestyle

A person's pattern of living as expressed in his or her activities, interests, and opinions. It involves measuring consumers' major AIO dimensions—activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products)

Attitude

A person's relatively consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. People have attitudes regarding religion, politics, clothes, music, food, and almost everything else. Attitude describes a person's relatively consistent evaluations, feelings, and tendencies toward an object or idea. Attitudes put people into a frame of mind of liking or disliking things, of moving toward or away from them. Our camera buyer may hold attitudes such as "Buy the best," "The Japanese make the best camera products in the world," and "Creativity and self-expression are among the most important things in life." If so, the Nikon camera would fit well into the consumer's existing attitudes.

Post Purchase Behavior

After purchasing the product, the consumer will either be satisfied or dissatisfied and will engage in postpurchase 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 consumer's dissatisfaction. This suggests that sellers should promise only what their brands can deliver so that buyers are satisfied.

Perception

All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste. However, each of us receives, organizes, and interprets this sensory information in an individual way. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world.

Consumer Market

All the individuals and households that buy or acquire goods and services for personal consumption.

Buying center

All the individuals and units that play a role in the purchase decision-making process. Actual users of the product or service People who make the buying decision People and units influencing the buying decision People who do the actual buying Individuals and units controlling the buying information

Information search

An interested consumer may or may not search for more information. If the consumer's drive is strong and a satisfying product is near at hand, he or she is likely to buy it then. If not, the consumer may store the need in memory or undertake an information search related to the need. For example, once you've decided you need a new car, at the least, you will probably pay more attention to car ads, cars owned by friends, and car conversations. Or you may actively search online, talk with friends, and gather information in other ways. Consumers can obtain information from any of several sources. These include personal sources (family, friends, neighbors, acquaintances), commercial sources (advertising, salespeople, dealer and manufacturer Web and mobile sites, packaging, displays), public sources (mass media, consumer rating organizations, social media, online searches, and peer reviews), and experiential sources (examining and using the product). The relative influence of these information sources varies with the product and the buyer.

5 stages of the adoption Process

Awareness. The consumer becomes aware of the new product but lacks information about it. Interest. The consumer seeks information about the new product. Evaluation. The consumer considers whether trying the new product makes sense. Trial. The consumer tries the new product on a small scale to improve his or her estimate of its value. Adoption. The consumer decides to make full and regular use of the new product.

Derived demand

Business demand that ultimately comes from (derives from) the demand for consumer goods. For example, demand for Gore-Tex fabrics derives from consumer purchases of outdoor apparel brands made from Gore-Tex. And consumers buy Corning's Gorilla Glass only when they buy laptops, tablets, and smartphones with Gorilla Glass screens from producers such as Apple, Samsung, Lenovo, Dell, HP, Sony, and Microsoft. If consumer demand for these end products increases, so does the demand for the Gore-Tex fabrics and the Gorilla Glass they contain.

cognitive dissonance

Buyer discomfort caused by postpurchase conflict.

Systems selling (or solutions selling)

Buying a complete solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation. Many business buyers prefer to buy a complete solution to a problem from a single seller rather than buying separate products and services from several suppliers and putting them together

Factors effecting consumer behavior

Cultural, social, personal, psychological, Buyer

Cultural

Culture, subculture, social class

Family

Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services.

Purchase Decision

Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others. If someone important to you thinks that you should buy the lowest-priced car, then the chances of you buying a more expensive car are reduced. The second factor is unexpected situational factors. The consumer may form a purchase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention. For example, the economy might take a turn for the worse, a close competitor might drop its price, or a friend might report being disappointed in your preferred car. Thus, preferences and even purchase intentions do not always result in an actual purchase choice.

The 5 adopter groups have differentiating values

Innovators are venturesome—they try new ideas at some risk. Early adopters are guided by respect—they are opinion leaders in their communities and adopt new ideas early but carefully. Early mainstream adopters are deliberate—although they rarely are leaders, they adopt new ideas before the average person. Late mainstream adopters are skeptical—they adopt an innovation only after a majority of people have tried it. Finally, lagging adopters are tradition bound—they are suspicious of changes and adopt the innovation only when it has become something of a tradition itself.

Total market strategy

Integrating ethnic themes and cross-cultural perspectives within a brand's mainstream marketing, appealing to consumer similarities across sub cultural segments rather than differences. An example is general-market commercials for Cheerios and Swiffer that feature interracial families.10 A total market strategy appeals to consumer similarities across subcultural segments rather than differences.

Groups and social networks

Many small groups influence a person's behavior. Groups that have a direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct (face-to-face interactions) or indirect points of comparison or reference in forming a person's attitudes or behavior. People often are influenced by reference groups to which they do not belong. For example, an aspirational group is one to which the individual wishes to belong, as when a young basketball player hopes to someday emulate basketball star LeBron James and play in the NBA.

Cultural Shift

Marketers are always trying to spot cultural shifts so as to discover new products that might be wanted. For example, the cultural shift toward greater concern about health and fitness has created a huge industry for health-and-fitness services, exercise equipment and clothing, organic foods, and a variety of diets.

The 4 P's

Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other stimuli include major forces and events in the buyer's environment: economic, technological, social, and cultural. All these inputs enter the buyer's black box, where they are turned into a set of buyer responses—the buyer's attitudes and preferences, brand engagements and relationships, and what he or she buys, when, where, and how much. Go to chapter 5 and re-read

Online-social networks

Online communities—blogs, social networking Web sites, and other online communities—where people socialize or exchange information and opinions. Marketers are working to harness the power of these new social networks and other "word-of-Web" opportunities to promote their products and build closer customer relationships. Instead of throwing more one-way commercial messages at consumers, they hope to use the digital, mobile, and social media to interact with consumers and become a part of their conversations and lives.

Age and life cycle stage

People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle—the stages through which families might pass as they mature over time. Life-stage changes usually result from demographics and life-changing events—marriage, having children, purchasing a home, divorce, children going to college, changes in personal income, moving out of the house, and retirement. Marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage. One of the leading life-stage segmentation systems is the Nielsen PRIZM Lifestage Groups system. PRIZM classifies every American household into one of 66 distinct life-stage segments, which are organized into 11 major life-stage groups, based on affluence, age, and family characteristics The major PRIZM Lifestage groups carry names such as "Striving Singles," "Midlife Success," "Young Achievers," "Sustaining Families," "Affluent Empty Nests," and "Conservative Classics," which in turn contain subgroups such as "Brite Lites, Li'l City," "Kids & Cul-de-Sacs," "Gray Power," and "Big City Blues."

Social class

Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. Almost every society has some form of social class structure. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Social scientists have identified the seven American social classes: upper upper class, lower upper class, upper middle class, middle class, working class, upper lower class, and lower lower class. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. In some social systems, members of different classes are reared for certain roles and cannot change their social positions. In the United States, however, the lines between social classes are not fixed and rigid; people can move to a higher social class or drop into a lower one.

Supplier Development

Systematic development of networks of supplier-partners to ensure a dependable supply of products and materials for use in making products or reselling them to others.

Business Markets

The business market is huge. In fact, business markets involve far more dollars and items than do consumer markets. For example, think about the large number of business transactions involved in the production and sale of a single set of Goodyear tires. Various suppliers sell Goodyear the rubber, steel, equipment, and other goods that it needs to produce tires. Goodyear then sells the finished tires to retailers, which in turn sell them to consumers. Thus, many sets of business purchases were made for only one set of consumer purchases. In addition, Goodyear sells tires as original equipment to manufacturers that install them on new vehicles and as replacement tires to companies that maintain their own fleets of company cars, trucks, or other vehicles. The main differences are in market structure and demand, the nature of the buying unit, and the types of decisions and the decision process involved

Market Structure and Demand

The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. Further, many business markets have inelastic and more fluctuating demand. The total demand for many business products is not much affected by price changes, especially in the short run. A drop in the price of leather will not cause shoe manufacturers to buy much more leather unless it results in lower shoe prices that, in turn, increase consumer demand for shoes. And the demand for many business goods and services tends to change more—and more quickly—than does the demand for consumer goods and services. A small percentage increase in consumer demand can cause large increases in business demand. Derived Demand

Consumer buyer behavior

The buying behavior of final consumers—individuals and households that buy goods and services for personal consumption.

Business buyer behavior

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.

Influence of Product Characteristics on Rate of Adoption

The characteristics of the new product affect its rate of adoption. Some products catch on almost overnight. For example, Apple's iPod, iPhone, and iPad flew off retailers' shelves at an astounding rate from the day they were first introduced. Others take a longer time to gain acceptance. For example, all-electric cars were first introduced in the United States in 2010, led by models such as the Nissan Leaf and the Tesla Model S. However, electric vehicles still account for far less than 1 percent of total U.S. automobile sales. It will likely be years or even decades before they replace the gasoline-powered cars.27 Five characteristics are especially important in influencing an innovation's rate of adoption. For example, consider the characteristics of all-electric vehicles in relation to their rate of adoption: (Relative advantage, compatibility, Complexity, Divisibility, Communicability)

Relative advantage

The degree to which the innovation appears superior to existing products. All-electric cars require no gas and use clean, less costly energy. This accelerated their rate of adoption. However, they have limited driving range before recharging and cost more initially, which will slow the adoption rate.

compatibility

The degree to which the innovation fits the values and experiences of potential consumers. Electric cars are driven the same way as gas-powered cars. However, they are not compatible with the nation's current refueling network. Plug-in electric charging stations are few and far between. Increased adoption will depend on the development of a national network of recharging stations, which may take considerable time.

Complexity

The degree to which the innovation is difficult to understand or use. Electric cars are not different or complex to drive, which will help to speed up adoption. However, the "conceptual complexity" of the new technologies and concerns about how well they will likely work slow down the adoption rate.

Divisibility

The degree to which the innovation may be tried on a limited basis. Consumers can test-drive electric cars, a positive for the adoption rate. However, current high prices to own and fully experience these new technologies will likely slow adoption.

Communicability

The degree to which the results of using the innovation can be observed or described to others. To the extent that electric cars lend themselves to demonstration and description, their use will spread faster among consumers.

Environmental

The economy, Supply conditions, Technology, Politics/regulation, Competition, Culture and customs

Word-of-mouth

The impact of the personal words and recommendations of trusted friends, family, associates, and other consumers on buying behavior. can have a powerful impact on consumer buying behavior. The personal words and recommendations of trusted friends, family, associates, and other consumers tend to be more credible than those coming from commercial sources, such as advertisements or salespeople. One recent study showed that 92 percent of consumers trust recommendations from friends and family above any form of advertising.11 Most word-of-mouth influence happens naturally: Consumers start chatting about a brand they use or feel strongly about one way or the other. Often, however, rather than leaving it to chance, marketers can help to create positive conversations about their brands.

Business buying process

The process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands.

Culture

The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. Cultural factors exert a broad and deep influence on consumer behavior. Growing up in a society, a child learns basic values, perceptions, wants, and behaviors from his or her family and other important institutions. A child in the United States normally is exposed to the following values: achievement and success, freedom, individualism, hard work, activity and involvement, efficiency and practicality, material comfort, youthfulness, and fitness and health. 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.

Personality

The unique psychological characteristics that distinguish a person or group. Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness Most well-known brands are strongly associated with one particular trait: the Ford F150 with "ruggedness," Apple with "excitement," the Washington Post with "competence," Method with "sincerity," and Gucci with "class and sophistication." Hence, these brands will attract persons who are high on the same personality traits. JetBlue projects a "human" personality.

Group

Two or more people who interact to accomplish individual or mutual goals.

Individual

age/education job positions motives personality preferences buying style

Learning

describes changes in an individual's behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement.

Business buying behavior

environmental, organizational, interpersonal, individual

interpersonal

influence, expertise, authority, dynamics

Buzz Marketing

involves enlisting or even creating opinion leaders to serve as "brand ambassadors" who spread the word about a company's products. Consider Mercedes-Benz's award-winning "Take the Wheel" influencer campaign Mercedes challenged 5 big Instagram influences to post pictures of them driving their new car and whoever got the most likes got to keep it. A guy liked the Mcrib so much he created a website about where to locate it

Belief

is a descriptive thought that a person holds about something. Beliefs may be based on real knowledge, opinion, or faith and may or may not carry an emotional charge. Marketers are interested in the beliefs that people formulate about specific products and services because these beliefs make up product and brand images that affect buying behavior. If some of the beliefs are wrong and prevent purchase, the marketer will want to launch a campaign to correct them.

Business-to-business (B2B) Marketers

marketers must do their best to understand business markets and business buyer behavior. Then, like businesses that sell to final buyers, they must engage business customers and build profitable relationships with them by creating superior customer value.

Psychological Factors

motivation, perception, learning, beliefs and attitudes

The Buying Process

need recognition - information search - examine alternatives - purchase choice - post purchase behavior

organizational

objectives, strategies, structure, systems, procedures

Social Factors

small groups, social networks, family, and social roles and status. (Groups and Social Networks, Family, Roles and status)

Evaluation of Alternatives

that is, how consumers process information to choose among alternative brands How consumers go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. In some cases, consumers use careful calculations and logical thinking. At other times, the same consumers do little or no evaluating. Instead, they buy on impulse and rely on intuition. Sometimes consumers make buying decisions on their own; sometimes they turn to friends, online reviews, or salespeople for buying advice.

Need Recgonition

the buyer recognizes a problem or need. The need can be triggered by internal stimuli when one of the person's normal needs—for example, hunger or thirst—rises to a level high enough to become a drive. A need can also be triggered by external stimuli. For example, an advertisement or a discussion with a friend might get you thinking about buying a new car. At this stage, the marketer should research consumers to find out what kinds of needs or problems arise, what brought them about, and how they led the consumer to this particular product.

Adoption Process

the mental process through which an individual passes from first learning about an innovation to final adoption. Adoption is the decision by an individual to become a regular user of the product.

Selective attention

—the tendency for people to screen out most of the information to which they are exposed—means that marketers must work especially hard to attract the consumer's attention.

Nature of the buying Unit

• More decision participants • Professional purchasing procedures business purchase usually involves more decision participants and a more professional purchasing effort. Often, business buying is done by trained purchasing agents who spend their working lives learning how to buy better. The more complex the purchase, the more likely it is that several people will participate in the decision-making process. Buying committees composed of technical experts and top management are common in the buying of major goods. Beyond this, B-to-B marketers now face a new breed of higher-level, better-trained supply managers. Therefore, companies must have well-trained marketers and salespeople to deal with these well-trained buyers.