Consumer BehaviourConsumer BehaviourConcepts and Concepts and ApplicationsApplications

Not a simple picture !!!Not a simple picture !!!

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To considerTo consider

influences on consumer buying processesinfluences on consumer buying processes problem-solving: problem-solving: pleasure seeking (irrational) vs. pleasure seeking (irrational) vs.

rational views of buyingrational views of buying how we construe our buying/spending: perceptions, how we construe our buying/spending: perceptions,

attitudes & motivationsattitudes & motivations pre-exchange, in the exchange itself & post exchangepre-exchange, in the exchange itself & post exchange

categories of influence: categories of influence: environmental and culturalenvironmental and cultural individual and reference groupsindividual and reference groups

Insights from learning theory Insights from learning theory B2C and B2B organisational buying behavioursB2C and B2B organisational buying behaviours marketing strategy & communications design marketing strategy & communications design

implications implications

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ObviouslyObviously

Individual customers & organisational Individual customers & organisational customers buy goods & servicescustomers buy goods & services

They are stimulated & prompted to buyThey are stimulated & prompted to buy

Marketers Marketers are interested in their decision behaviour are interested in their decision behaviour try to stimulate & influence this behaviour to try to stimulate & influence this behaviour to

get better responses from the customerget better responses from the customer

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Marketers, actors & roles in buyingMarketers, actors & roles in buying

marketing concept …"satisfy marketing concept …"satisfy consumer needs for profit/value" consumer needs for profit/value" so....so....

to segment, target & construct our to segment, target & construct our marketing mix & promotions well, marketing mix & promotions well, we must understand consumers & we must understand consumers & their behaviourtheir behaviour

we can study actual purchases we can study actual purchases then find ways to encourage them then find ways to encourage them to consider buying & then buy !!!to consider buying & then buy !!!

buying may involve buying may involve many stepsmany steps many peoplemany people

the actual purchase is but one part the actual purchase is but one part of the processof the process

Actors and roles the same person can play multiple roles•consumers•opinion formers•marketers•public policy actors

Actors and roles the same person can play multiple roles•consumers•opinion formers•marketers•public policy actors

Who is important in the buying decision?What do they buy & how much ?When do they buy & where ?How do they buy?What choice criteria do they use?How do they respond to the efforts we use?

Who is important in the buying decision?What do they buy & how much ?When do they buy & where ?How do they buy?What choice criteria do they use?How do they respond to the efforts we use?

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Buyer Behaviour ModelBuyer Behaviour Model

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buyer’s black box

buyer’s black box

Needs - wants, stimuli

Product, price, place, promotion etc

Environmental (PEST) factors

Buyer responses

Choices of •product•brand•dealer•timing•priceBuy more, less, stay loyal etc

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Information searchInformation search

How we buy (a rational view)How we buy (a rational view)

Need recognition, problem-awarenessNeed recognition,

problem-awareness

Evaluate alternativesEvaluate alternatives

Information searchInformation search

BuyBuy

Post-purchase evaluation

Post-purchase evaluation

Shape desire, wantShape desire, want

Evaluate alternatives (against evoked set)Evaluate alternatives (against evoked set)

Window-shop – simmering interestsWindow-shop – simmering interests

BuyBuy

Post-purchase evaluation

Post-purchase evaluation

• functional• emotional ?• current vs desired situation• relative importance• need inhibitors

• are they aware of need ?• can we mediate need inhibitors?• can we stimulate awareness &

action

• internal search (memory)• external search (personal

sources, commercial sources• third party reports (e.g. Which)• personal observation/testing

Evokedset

Operant (or instrumental) conditioningOperant (or instrumental) conditioning

Learning based upon the consequences of Learning based upon the consequences of behaviourbehaviour

the chance of a specific behaviour goes the chance of a specific behaviour goes or or thru +ve or -ve reinforcement each time the thru +ve or -ve reinforcement each time the behaviour happensbehaviour happens

we associate the pleasure or displeasure of the we associate the pleasure or displeasure of the reinforcement with the behaviourreinforcement with the behaviour

Consequences of responding that increase Consequences of responding that increase behaviour are “behaviour are “reinforcers”reinforcers”

Marketers want to know the “reinforcers”Marketers want to know the “reinforcers”77

Responses are reinforced, punished, Responses are reinforced, punished, or extinguished 1or extinguished 1

Reinforcement is …Reinforcement is … a consequence that a consequence that more frequent behaviour more frequent behaviour

Positive reinforcement Positive reinforcement a behaviour (response) a behaviour (response) a favourable stimulus a favourable stimulus

(commonly pleasant) (commonly pleasant) increasing the frequency of increasing the frequency of the behaviourthe behaviour

Negative reinforcement Negative reinforcement a behaviour (response) a behaviour (response) lessening of an aversive lessening of an aversive

stimulus (commonly unpleasant) increasing that stimulus (commonly unpleasant) increasing that behaviours frequencybehaviours frequency

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Responses are reinforced, punished, Responses are reinforced, punished, or extinguished 2or extinguished 2

PunishmentPunishment a consequence that causes a behaviour to occur less a consequence that causes a behaviour to occur less

oftenoften

Positive punishment ("P. by contingent stimulation") Positive punishment ("P. by contingent stimulation") a behaviour (response) a behaviour (response) an aversive stimulus an aversive stimulus a a

decrease in the behaviour. decrease in the behaviour.

Negative punishment ("P. by contingent withdrawal") Negative punishment ("P. by contingent withdrawal") a behaviour (response) a behaviour (response) removal of a favourable removal of a favourable

stimulus e.g. taking away a naughty child's toy, resulting stimulus e.g. taking away a naughty child's toy, resulting in less of that behaviourin less of that behaviour

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Responses are reinforced, Responses are reinforced, punished, or extinguished 3punished, or extinguished 3

Avoidance learning Avoidance learning a behaviour r a behaviour r ending of an aversive ending of an aversive

stimulus e.g. we no longer contact someone & stimulus e.g. we no longer contact someone & so avoid their unpleasantness. so avoid their unpleasantness.

Extinction Extinction a behaviour (response) that had previously been a behaviour (response) that had previously been

reinforced is no longer effectivereinforced is no longer effective the lack of any consequence following a the lack of any consequence following a

behaviourbehaviour1010

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Roles in the decision processRoles in the decision processafter after Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson Blackwell/Miniard/Engel, 2007 Consumer Behaviour, 10th Ed, Thomson

each role can be acted by parent, children or other each role can be acted by parent, children or other members of the buying centre. members of the buying centre.

Each actor may display multiple roles when buying•a toy purchase•a house•a washing machine•an armoured vehicle•a sound system•computer software

Each actor may display multiple roles when buying•a toy purchase•a house•a washing machine•an armoured vehicle•a sound system•computer software

Infants, teenagers, working women, husbands?Infants, teenagers, working women, husbands?

Influencing Strategies

1.expert influencing2.subtle (incl. use of rewards3.emotional 4.combination

Influencing Strategies

1.expert influencing2.subtle (incl. use of rewards3.emotional 4.combination

Who is initiator influencer decider buyer user

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What is the Relative Influence of Husbands What is the Relative Influence of Husbands

vs. Wives in Decision Making? vs. Wives in Decision Making?

How is this changing?

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Influences on Consumer Influences on Consumer BehaviourBehaviour

CulturalCultural broadest & deepest influencebroadest & deepest influence cultures & subculturecultures & subculture social classessocial classes

SocialSocial FamilyFamily Social roles and status (multiple)Social roles and status (multiple) Reference groupsReference groups

Membership - primary vs. secondary Membership - primary vs. secondary Aspirational vs. dissociativeAspirational vs. dissociative

PersonalPersonal AgeAge Life cycle stageLife cycle stage OccupationOccupation Economic circumstancesEconomic circumstances LifestyleLifestyle PersonalityPersonality Self-conceptSelf-concept

PsychologicalPsychological MotivationMotivation PerceptionPerception LearningLearning BeliefsBeliefs AttitudesAttitudes

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Personal influencesPersonal influencesPerceptionPerception "mind" processes - selection, association, "mind" processes - selection, association,

organisation & interpretation. Weorganisation & interpretation. We only note only note somesome things (selective) i.e. things (selective) i.e. what what

grabs attention + distortion & retentiongrabs attention + distortion & retention associate & categorise information into associate & categorise information into

meaningful wholesmeaningful wholes interpret/make inferencesinterpret/make inferences

information framing e.g. information framing e.g. good news or bad news first ? good news or bad news first ? accentuate the positives, eliminate the accentuate the positives, eliminate the

negativesnegatives

LearningLearning classical & operant conditioningclassical & operant conditioning cognitive learningcognitive learning

by roteby rotevicarious (from others)vicarious (from others)reasoningreasoning

what motivates uswhat motivates us what we believe inwhat we believe in

real knowledge, opinion or real knowledge, opinion or faithfaith

Our attitudes Our attitudes relatively consistent relatively consistent

evaluations, feelings, evaluations, feelings, tendencies towards somethingtendencies towards something

Three componentsThree components cognitive (belief), cognitive (belief), affective (feeling), affective (feeling), conative (behavioural)conative (behavioural)

personalitypersonality self-concept, lifestyle & self-concept, lifestyle &

life cycle stageslife cycle stages

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Perceptual, conceptual & related capacitiesPerceptual, conceptual & related capacitiesPerceptual - Perceptual - Sensing, measuring, judgingSensing, measuring, judging

Colour, sound, texture, smell. Interpreting smells, noises, signalsColour, sound, texture, smell. Interpreting smells, noises, signals Monitoring sounds, vibrations, data, informationMonitoring sounds, vibrations, data, information Frames of reference – what is your “vantage point”Frames of reference – what is your “vantage point”

ConceptualConceptual associating, abstracting, formulating, calculating, inferring associating, abstracting, formulating, calculating, inferring understanding processes in the abstractunderstanding processes in the abstract deriving ideas & predicting from associated, comparative informationderiving ideas & predicting from associated, comparative information depends on knowledge and know-how (range & level)depends on knowledge and know-how (range & level) dealing with symbolic information + its associationsdealing with symbolic information + its associations

Relating - Relating - Ego + alter-ego oriented: Ego + alter-ego oriented: need for achievement, power, affiliationneed for achievement, power, affiliation sensitivity & empathy, identification & association, objective-subjective, sensitivity & empathy, identification & association, objective-subjective,

attitudes & valuesattitudes & values

PhysicalPhysical Storage, access, processing & transmission capacity, security, privacyStorage, access, processing & transmission capacity, security, privacy

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Concepts in socio-cultural Concepts in socio-cultural examinationexamination

CultureCulture a socially constructed complex of a socially constructed complex of

values, ideas, attitudes, institutions, values, ideas, attitudes, institutions, meanings & symbols that shape and meanings & symbols that shape and are shaped by behaviour & maybe are shaped by behaviour & maybe passed on thru generationspassed on thru generations

Social ClassSocial Class relatively permanent divisions in a relatively permanent divisions in a

society into which individuals or society into which individuals or families may be categorized families may be categorized

based on perceived status & prestige.based on perceived status & prestige.Sub- or Micro-cultureSub- or Micro-culture a sub-group with its own distinguishing a sub-group with its own distinguishing

modes of behaviour.modes of behaviour.RoleRole Behaviours, rights, duties expected of Behaviours, rights, duties expected of

an individual in a group by other an individual in a group by other membersmembers

Reference groupsReference groups structures & standards structures & standards

influence behaviour.influence behaviour.MembershipMembership groups we actually belong togroups we actually belong toAspirational Aspirational We wish to associate with We wish to associate with

this group.this group.DisassociativeDisassociative We do not want to be We do not want to be

identified with this group.identified with this group.Power studies Power studies how roles, groups & norms how roles, groups & norms

influence individual influence individual behaviour.behaviour.

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Opinion formersOpinion formers Trendsetters Trendsetters

influential people in a group who influential people in a group who purchase new products earlypurchase new products early serve as information sources for othersserve as information sources for others

The MediaThe Media TV, newspapers, magazines, Internet communicationTV, newspapers, magazines, Internet communication commentatorscommentators the media need "stories"the media need "stories"

Sellers & MarketersSellers & Marketers "seeding" the media. Pay media producers for product "seeding" the media. Pay media producers for product

placement in "publication channels"placement in "publication channels" From a Fashion house to PrimarkFrom a Fashion house to Primark Advertising, promotions & incentivesAdvertising, promotions & incentives Word-of-mouth - viralWord-of-mouth - viral

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Personality & self conceptPersonality & self concept extroversion-introversionextroversion-introversion self-confidence, dominanceself-confidence, dominance sociabilitysociability autonomyautonomy defensivenessdefensiveness adaptabilityadaptability aggressivenessaggressiveness

Towards a brand personality:Towards a brand personality:““the brand & Me”the brand & Me” sinceritysincerity

down to earth, honest, wholesome, down to earth, honest, wholesome, cheerfulcheerful

excitementexcitement daring, spirited, imaginative, up-to-daring, spirited, imaginative, up-to-

datedate competencecompetence

reliable, intelligent, successfulreliable, intelligent, successful sophisticationsophistication

higher class, charminghigher class, charming ruggednessruggedness

outdoors, toughoutdoors, tough e.g. Take care of pennies & £ will e.g. Take care of pennies & £ will

take care of themselvestake care of themselves

Levi Jeans ?

Swaferga ?Branston baked beans?Chicken jalfrazi ?

Top Gear ?Yesterday Channel ?Lands End?

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Components of AttitudeComponents of Attitude

Attitude(overall orientation toward object or idea)

Cognitive(knowledge & beliefs

about a subject/object)

Affective(overall feelings or emotive reactions)

Behavioural(how we tend to behave)

A person’s enduring favourable or unfavourable evaluation of some object or idea

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Choice criteriaChoice criteria attributes & variables a attributes & variables a

consumer uses when consumer uses when evaluating products & evaluating products & servicesservices

different members of different members of buying centre obviously buying centre obviously may use different criteriamay use different criteria

e.g. a teenager or a WAG e.g. a teenager or a WAG (self-image), a parent (for (self-image), a parent (for the baby), an OAP (price the baby), an OAP (price or risk reduction)or risk reduction)

Socialstatussocial belongingfashion

Personal self-imagerisk reductionmoralsemotion

Socialstatussocial belongingfashion

Personal self-imagerisk reductionmoralsemotion

Technical

reliabilitydurabilityperformancestyle/lookscomfortdeliveryconveniencetaste

Economicprice, VfMrunning costsresidual valuelife cycle costs

Technical

reliabilitydurabilityperformancestyle/lookscomfortdeliveryconveniencetaste

Economicprice, VfMrunning costsresidual valuelife cycle costs

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Consumer Problem-Solving Consumer Problem-Solving CategoriesCategories

Routinised (habitual) Routinised (habitual) repeat buys. repeat buys. Advertising may influence a change – also Advertising may influence a change – also

promotions (2 for 1), branding to keep product in promotions (2 for 1), branding to keep product in customer’s mindcustomer’s mind

Limited problem solving (LPS)Limited problem solving (LPS) buyer has some experience, may check prices buyer has some experience, may check prices

etc. Buyers can advertise to stimulate & compare etc. Buyers can advertise to stimulate & compare or reduce risk of brand switchingor reduce risk of brand switching

Extended problem solving (EPS)Extended problem solving (EPS)

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Extended problem-solvingExtended problem-solving Research all choice Research all choice

alternatives + examine alternatives + examine solutionssolutions

alternatives are alternatives are differentiated & differentiated & numerousnumerous

high deliberation & high deliberation & involvement timeinvolvement time

personally relevant personally relevant (risks)(risks)

high potential for high potential for cognitive dissonancecognitive dissonance

Research all choice Research all choice alternatives + examine alternatives + examine solutionssolutions

alternatives are alternatives are differentiated & differentiated & numerousnumerous

high deliberation & high deliberation & involvement timeinvolvement time

personally relevant personally relevant (risks)(risks)

high potential for high potential for cognitive dissonancecognitive dissonance

self-image

risks

socialfactors

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Cigarette advertisingCigarette advertising

Cognitive dissonance Cognitive dissonance (after Festinger)(after Festinger)

discomfort when facing logical inconsistencies in our discomfort when facing logical inconsistencies in our thinking (cognitions) e.g. a belief in animal rights may be thinking (cognitions) e.g. a belief in animal rights may be seen as inconsistent with eating meat or wearing fur. seen as inconsistent with eating meat or wearing fur.

We may feel anxiety assoc. with bad decisions: guilt, We may feel anxiety assoc. with bad decisions: guilt, shame, anger, embarrassment, stress or other. This can shame, anger, embarrassment, stress or other. This can lead to rationalisation: justifications to support our choices lead to rationalisation: justifications to support our choices or change in attitudes, beliefs & behaviours. or change in attitudes, beliefs & behaviours.

When ideas are consistent … harmony or consonance.When ideas are consistent … harmony or consonance.

If cognitions are unrelated, they are "irrelevant" not If cognitions are unrelated, they are "irrelevant" not dissonant.dissonant.

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Aesop's "The Fox and the Grapes" Aesop's "The Fox and the Grapes"

A fox sees some tasty, grapes high on the A fox sees some tasty, grapes high on the vine but can't think how to reach them. He vine but can't think how to reach them. He concludes that the grapes are probably not concludes that the grapes are probably not worth eating anyway (not yet ripe, too worth eating anyway (not yet ripe, too sour). sour).

Nb. dissonance in the desire for something Nb. dissonance in the desire for something unattainable & so the fox irrationally unattainable & so the fox irrationally decides that the "thing" must be flawed decides that the "thing" must be flawed (Sour Grapes).(Sour Grapes).

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Smoking Smoking we know that cigarettes cause lung cancerwe know that cigarettes cause lung cancer we want to live a long and healthy life we want to live a long and healthy life we can we can

quit smoking & reduce the tension between the contradictory quit smoking & reduce the tension between the contradictory ideas orideas or

deny conclusions about lung cancer or justify our smokingdeny conclusions about lung cancer or justify our smoking

““Only a few smokers become ill". "It only happens to Only a few smokers become ill". "It only happens to very heavy smokers“. "If smoking does not kill me, very heavy smokers“. "If smoking does not kill me, something else will." "I am a smart, reasonable person something else will." "I am a smart, reasonable person who makes good decisions." Easier to make excuses who makes good decisions." Easier to make excuses than to change behaviour. Humans are rationalizing and than to change behaviour. Humans are rationalizing and not always rational.not always rational.

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Social classesSocial classes

Upper UppersUpper Uppers Lower UppersLower Uppers Upper MiddlesUpper Middles Middle ClassMiddle Class Working ClassWorking Class Upper LowersUpper Lowers Lower LowersLower Lowers

Chavs • slang (UK) for a subcultural stereotype• Aspirants who want to be in a "class"

above their actual class. • spend on fashion for upward social

mobility.• fixated on fashion 'designer' clothing,

handbags, gold jewelery e.g. Burberry,

• trying to adopt lifestyle of admired, referent class but not seen as successful.

• considered to be in poor taste, ignorant, • labelled as "trying too hard, not worthy

enough".

Chavs • slang (UK) for a subcultural stereotype• Aspirants who want to be in a "class"

above their actual class. • spend on fashion for upward social

mobility.• fixated on fashion 'designer' clothing,

handbags, gold jewelery e.g. Burberry,

• trying to adopt lifestyle of admired, referent class but not seen as successful.

• considered to be in poor taste, ignorant, • labelled as "trying too hard, not worthy

enough".

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VALS2 psychographic groupsVALS2 psychographic groups

ActualizersActualizers FulfilledsFulfilleds AchieversAchievers ExperiencersExperiencers BelieversBelievers StriversStrivers MakersMakers StrugglersStrugglers

How do you see How do you see each category each category behaving as behaving as buyers?buyers?

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Forrester TechnographicsForrester Technographicscustomer segments by motivation, desire & ability to customer segments by motivation, desire & ability to

invest in technologyinvest in technology

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Start hereStart hereExplain the customer behaviour appeals being Explain the customer behaviour appeals being

used by … each of the following …used by … each of the following … a selected product group within e.g. Gillettea selected product group within e.g. Gillette a company within the earth-moving equipment industry e.g. a company within the earth-moving equipment industry e.g.

JCB, Caterpillar, Komatsu etcJCB, Caterpillar, Komatsu etc A group within the hotel sector including: Hilton, Accor, A group within the hotel sector including: Hilton, Accor,

Travelodge, TownhouseTravelodge, Townhouse HMVHMV

What common or different customer behaviour appeals are being What common or different customer behaviour appeals are being used by used by

http://www.wickes.co.uk/http://www.wickes.co.uk/ http://www.screwfix.comhttp://www.screwfix.com http://www.diy.com/http://www.diy.com/ http://www.homebase.co.ukhttp://www.homebase.co.uk

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Explain the following in terms of consumer Explain the following in terms of consumer behaviour debatebehaviour debate

fitting roomsfitting rooms return of goods policies e.g. B&Q, Next on-linereturn of goods policies e.g. B&Q, Next on-line 2-for-1, 20% bigger2-for-1, 20% bigger interest free for interest free for

3 months (over £300)3 months (over £300) 3-years (DFS)3-years (DFS)

"Never knowingly undersold" - John Lewis Partnership"Never knowingly undersold" - John Lewis Partnership free delivery over £15 (Amazon)free delivery over £15 (Amazon) main dealer trade in values, old car-new carmain dealer trade in values, old car-new car easy financing termseasy financing terms free insurancefree insurance mobile phone automatic new model + cheaper contract + extrasmobile phone automatic new model + cheaper contract + extras home deliveries e.g. Tescohome deliveries e.g. Tesco £15 (21 days in advance), £26 (7 days), £55 – with on-line booking - £15 (21 days in advance), £26 (7 days), £55 – with on-line booking -

TravelodgeTravelodge 4x Tesco Club Card points value for Cafe Rouge vouchers (£8 = £32)4x Tesco Club Card points value for Cafe Rouge vouchers (£8 = £32)

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Post-purchase evaluationPost-purchase evaluation We want customer to have positive experiences We want customer to have positive experiences

from purchase but from purchase but they may experiencethey may experience

Cognitive DissonanceCognitive DissonancePre-purchase, purchase or post-purchasePre-purchase, purchase or post-purchase

attitudes & behaviour should be consistent with one attitudes & behaviour should be consistent with one another. If you buy a car & your friend thinks that it is another. If you buy a car & your friend thinks that it is rubbish …..rubbish …..

uncertainty – "Have I made the right decision?"uncertainty – "Have I made the right decision?" feel anxiety, disappointment, remorsefeel anxiety, disappointment, remorse discrepancy between expectation & experiencediscrepancy between expectation & experience reflect on opportunity cost and lost - difficult reflect on opportunity cost and lost - difficult

decision, many alternativesdecision, many alternatives irrevocable decisionirrevocable decision neurotic customer (impulse buy)neurotic customer (impulse buy) post-purchase remorsepost-purchase remorse

What can marketer & seller do?

What can marketer & seller do?

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Post-purchase BehaviourPost-purchase Behaviour

expectations are compared to performanceexpectations are compared to performance post-purchase satisfaction influences future post-purchase satisfaction influences future

behaviourbehaviour future purchasing behaviourfuture purchasing behaviour word-of-mouth communicationword-of-mouth communication

Marketers try to influence post-purchase Marketers try to influence post-purchase behaviour. How ?behaviour. How ? Post-purchase communication to reduce dissonance, Post-purchase communication to reduce dissonance,

returns & order cancellationsreturns & order cancellations Talk with customers: Talk with customers:

discover new uses for existing productsdiscover new uses for existing products etcetc

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Evaluate Harley-Davidson Consumer BehaviourEvaluate Harley-Davidson Consumer Behaviour

Hells Angels ? Burly, Hells Angels ? Burly, leathers, bikers, rebelsleathers, bikers, rebels

New breed: New breed: olderolder more affluentmore affluent better educatedbetter educated rubbies (rich urbans)rubbies (rich urbans)

Showrooms + sales Showrooms + sales approachesapproaches

Customer types from HD Customer types from HD researchresearch

adventure-loving traditionalistsadventure-loving traditionalists sensitive pragmatistssensitive pragmatists stylish status seekersstylish status seekers laid-back camperslaid-back campers classy capitalistsclassy capitalists cool-headed lonerscool-headed loners cocky misfitscocky misfits

all loved their Harleys becauseall loved their Harleys because independence, freedom, powerindependence, freedom, power more than a machine – part of more than a machine – part of

self-expressionself-expression classic look, throaty soundclassic look, throaty sound American legendAmerican legend

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Scope of B2B MarketScope of B2B Market AgricultureAgriculture MiningMining ConstructionConstruction ManufacturingManufacturing TransportTransport Wholesale & retailWholesale & retail Finance, insurance, Finance, insurance,

propertyproperty GovernmentGovernment Non-profit & voluntary Non-profit & voluntary

organisationsorganisations

different needs & buying different needs & buying patterns e.g. medical from patterns e.g. medical from rubber gloves vs body scannerrubber gloves vs body scanner

buy raw materials/inputs to buy raw materials/inputs to make other goods/services e.g. make other goods/services e.g. sugar & flavouring as inputs for sugar & flavouring as inputs for PepsiPepsi

sell on to other business users sell on to other business users or consumers e.g. Argosor consumers e.g. Argos

use purchases to conduct use purchases to conduct business e.g. stationery, legal business e.g. stationery, legal services, IT/systems services, IT/systems consultancy, marketing servicesconsultancy, marketing services

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Purchasing decisions in B2B MarketsPurchasing decisions in B2B MarketsBuying is less frequent.Buying is less frequent.

new task buynew task buy buying decision not been buying decision not been

made beforemade before

modified rebuymodified rebuy bought before but this time bought before but this time

change spec. or new supplier change spec. or new supplier

straight rebuystraight rebuy routine purchase made many routine purchase made many

times beforetimes before

One-off, a batch or steady One-off, a batch or steady flow (JIT) flow (JIT)

Long, complex negotiationLong, complex negotiationService & consistency of Service & consistency of

quality & supply are vitalquality & supply are vital

Buying centreBuying centre Buying often a group process. Buying often a group process.

Who is in the buying group? Who is in the buying group? UsersUsers use the product e.g. trucksuse the product e.g. trucksInfluencers (direct or indirect)Influencers (direct or indirect) Tech know-how, budget etcTech know-how, budget etcDecidersDeciders Make the actual decision: Make the actual decision:

purchasing officer, manager, purchasing officer, manager, product/service userproduct/service user

GatekeepersGatekeepers Control flow of informationControl flow of informationBuyersBuyers Select suppliers & negotiate Select suppliers & negotiate

termsterms

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Organisational buyingOrganisational buying

Need recognition, problem-awarenessNeed recognition,

problem-awareness

Evaluate, negotiate, select

Evaluate, negotiate, select

Search for sources, research & approveSearch for sources, research & approve

Finalise contract & order routines

Finalise contract & order routines

Performance feedback & evaluation

Performance feedback & evaluation

Determine specification & quantity

Determine specification & quantity

Receive proposals & analyseReceive proposals & analyse

Integrate partnersystems

Integrate partnersystems

competitionlegal stepsfinancing

JITlogisticsconflict

outsourcing

quantitycontinuityqualitypricefinancinglife cycle costsprody

maintenanceresidual valuesriskspoliticspersonal

Choice criteria

Can we assume that B2B buying motives are rational, methodical & objective

Personal factors incl: relationships, self advancement

Motivators includeCost & profit-related benefits

Incentives & promotional support

Supply alliances for expansion & synergy + share costs, improve productivity etc

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Relationship MarketingRelationship Marketingestablishing & developing successful exchanges with customers.establishing & developing successful exchanges with customers.

InfluencesInfluencesglobal competition & defensive strategies. Growth in services global competition & defensive strategies. Growth in services (direct relationships). Focus on the ‘value chain’ + the ‘value (direct relationships). Focus on the ‘value chain’ + the ‘value proposition’ incl offering specific competencies proposition’ incl offering specific competencies

Customer relationship management (CRM)Customer relationship management (CRM)maximise customer retention & share of customer’s businessmaximise customer retention & share of customer’s businesspast behaviour is important past behaviour is important

The future involvesThe future involvesincreased WWW use – direct marketing & personalisationincreased WWW use – direct marketing & personalisationcosts of servicing unprofitable customerscosts of servicing unprofitable customersfocus on better servicing of other customersfocus on better servicing of other customers