Understanding Consumer and Business Markets

Chapter 5
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

The consumer market
 Geographic distribution, frequently divided into rural, urban, and suburban.  Demographics, the vital statistics that describe a population. In particular: • Age. • Gender. • Family life cycle. • Education. • Income distribution. • Ethnicity.
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Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Family life cycle
 Family life cycle will determine the purchase behaviour of individuals and reason for purchase.  Single parent and two-parent family.  Young couples no children.  Family (usually two adults, two young children).  Family with teenagers.  Multi-cultural (or mixed) family.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Situational influences
 Situational influences are the temporary forces associated with the immediate purchase environment that affect behaviour • When consumers buy—the time influence. (day, week, season). • Where consumers buy—the place a decision is made (home, point of purchase). • How consumers buy—the way in which consumers buy (bulk etc).
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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SOCIAL AND GROUP FORCES Culture Subculture Social class Reference groups Family and households

PSYCHOLOGICAL FORCES Motivation Perception Learning Personality Attitude SITUATIONAL FACTORS When consumers buy Where consumers buy Why consumers buy Conditions under which consumers buy

BUYING-DECISION PROCESS INFORMATION Commercial sources Need recognition Identification of alternatives Evaluation of alternatives Purchase and related decisions Social sources Post-purchase behaviour

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Consumer buying behaviour influences
 There are five main Buying Behaviour factors which influence consumer’s decision-making. • Motivation. • Perception. • Learning. • Personality. • Self-concept.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Consumer buying behaviour influences (cont.)

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Four demand characteristics that differentiate the business market from the consumer market
 Demand is derived from the demand for the ultimate consumer products in which the business product is finally used (e.g. steel).  In the short run demand is inelastic, that is, demand for a product responds very little to changes in price when: • The cost of a single part or material is a small portion of the total cost of the finished product. • If the part or material has no Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix substitute.prepared by Joe Rosagrata Slides 5-8
Copyright © 1997 by The McGraw-Hill Companies, Inc.

Four demand characteristics that differentiate the business market from the consumer market (cont.)
 Demand is widely fluctuating, meaning that demand for most classes of business goods fluctuates considerably more than the demand for consumer products.  The buyers are well informed and know the relative merits of alternative sources of supply and competitive Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix products.Slides prepared by Joe Rosagrata 5-9

Influences on business-market demand
 The number and types of potential business users.  Their buying power,  buying motives,  and buying habits.

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Key differences between the business market (BM) and consumer (CM) market
 Small number of BMs.  BMs have larger purchasing power and buy in quantity.  BMs are concentrated. CMs are not.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Key differences between the business market (BM) and consumer (CM) market (cont.)
 Sellers deal direct with business users.  BMs are usually regionally concentrated.  BMs can be vertically or horizontally concentrated.  BM’s buying motives are rational and Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata 5-12 purchase is methodical and objective.

Types of buying situations
1. New task  New purchase or product category.  More people involved in new purchase.  Extensive information must be collected and evaluated on alternative products.  Seller displays creative selling ability in satisfying buyer needs.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Types of buying situations (cont.)
2. Straight re-buy  Information needs are minimal  There is no great consideration of alternatives.  Buying decision made in the purchasing department e.g. purchasing of office supplies.

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Types of buying situations (cont.)
3. Modified re-buy  Situation in which the buyer wants to change (modify) the product specifications, price, terms, or suppliers.

Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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The buying centre
 A Buying Centre is all the individuals who play a part in the various buying roles and who influence buying decisions, determine product specification and make the buying decision • Users—people who actually use the good or service. • Influencers—people who set the specifications of, and help determine aspects of the buying decision because of their expertise, financial position, or political power.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Types of buying situations (cont.)
 Deciders—the people who make the actual buying decision regarding the product and supplier.  Gatekeepers—people who control the flow of purchasing information within the organisation, as well as between the firm and potential vendors.  Buyers—people who select the suppliers, arrange the terms of the sale and process the actual purchase orders.
Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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Buying patterns of business users
        Direct purchase. Frequency of purchases. Size of order. Length of negotiated period. Reciprocity arrangements. Service expectations. Dependability of supply. Leasing instead of buying.
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Copyright © 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix Slides prepared by Joe Rosagrata

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