Consumer Decision Making Process &

Characteristics of Industrial Markets

Unit 1
 Recapitulation

In the previous lecture, we learned:

• Marketing management is an ongoing process and involves a

high level of creativity. It involves steps from defining
business mission statement to implementation, evaluation
and control.

• The elements of the marketing mix is a blend of product,

place, promotion, and pricing strategies designed to produce
mutually satisfying exchanges with a target market.
 Learning Outcome
Learning Outcome - Students will be Programme Outcome
able to understand:
How do marketers analyze consumer PO2 : Foster Analytical and Critical Thinking
decision making? Ability

Analyze the difference between PO2 : Foster Analytical and Critical Thinking
consumer market and industrial market Ability
and highlight the characteristics of
Industrial market
 Why a marketer should understand
consumer behavior?

Understanding consumer behavior can help marketing managers adapt the marketing mix to
influence consumer purchasing decisions.
CONSUMER BEHAVIOUR

Consumer Behavior is the

study of how individuals,
groups, and organizations
select, buy, use, and dispose
of goods, services, ideas or
experiences to satisfy their
needs and wants

6
Model of Consumer Behavior
Consumer decision making process

8
 Situational Influences on the Buying
Decision Process
• Situational Influences
– Factors that can influence a buyer’s purchase decision and may cause the
buyer to shorten, lengthen, or terminate the process.

• Situational Factors Include

– Physical surroundings
– Social surroundings
– Time perspective
– Reason for purchase
– Buyer’s momentary mood
and condition
 Psychological Influences on the
Buying Decision Process
• Psychological Influences
– Factors that in part determine people’s general behavior, thus influencing
their behavior as consumers

• Psychological Influences Include

– Perception
– Motives
– Learning
– Attitudes
– Personality and self concept
– Lifestyles
 Social Influences on the Buying
Decision Process
• Social Influences
– The forces other people exert on one’s buying behavior

• Social Influences
– Roles
– Family
– Reference groups
– Opinion leaders
– Social class
– Culture and subcultures
Steps in Consumer Decision Making Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

Postpurchase
Behavior
Sources of Information

Personal Commercial

Public Experiential
Successive Sets Involved in Consumer
Decision Making
 Evaluation of Alternatives
• The consumer is trying to satisfy a need
• The consumer is looking for certain benefits
from the product solution.
• The consumer sees each product as a bundle
of attributes
A Consumer’s Evaluation of Brand Beliefs About
Laptops
What the second best brand can do?

Redesign laptop computer

Alter beliefs about the brand
Alter the importance weights
Call attention to neglected attributes
 Marketing Discussion

 Do you have rules you employ in

spending money?
 Do you follow Thaler’s four principles
in reacting to gains and losses?
 Marketing Debate

 Is target marketing ever bad?

Take a position:
1. Targeting minorities is exploitive.
or
2. Targeting minorities is a sound
business practice.
Characteristics of Industrial
Markets
Business organizations do not only sell ; they
also buy vast quantities of raw materials,
manufactured components, plant and
equipment, supplies and business services. To
create and capture value, marketers need to
understand these organization’s needs,
resources, policies and buying procedures.
 Characteristics of Industrial Markets
It is important to understand some characteristic features of Industrial Markets. The
characteristics refer to the qualities, different and similar between consumer and
industrial markets and enable marketers to identify and decide the kind of market to
satisfy with their limited resources.

1. Demand
This is derived demand that rests upon the demands of the ultimate consumer. The
demand of an industrial buyer changes keeping with the changes in the ultimate
consumers' demand. For instance, demand of electricity generator is determined
according to the demand made by the consumers.

2. Geographical location
Industrial buyers are concentrated in certain geographical area. This is because
industrial market is determined considering transport facilities, cost and other factors
such as climate condition, raw materials, labor supply, etc.

3. Few Number of Buyers

The number of industrial buyers remains small but the volume of sale is large. So,
industrial marketers buy goods or services in large volumes or bulk quantities paying up
a big amount of price.
4. Direct Channel Of Distribution
There is direct contact between an industrial buyer and seller.

5. High purchasing power

The industrial market is able to concentrate a lot of purchasing power for the simple fact that it has a high
budget in which they can have more with less, as it happens with the wholesale companies.

6. More Complex
In an industrial buying process, different people participate in buying decisions. An industrial buyer has to
know the role of users, motivators, decision makers, buyers and gatekeepers who determine the overall
buying process while taking decision on buying.

7. Buying Objectives
The industrial market, as we know, are organizations that acquire goods and services that enter into the
production of other products or services. Consequently, corporate buyers will spend money on a product
that does one of these three things:
– helps increase his sales
– helps lower his costs
– helps reduce friction or irritation within his operations and helps to ultimately achieve above
two.
8. Rational
They want to derive more information about the quality, utility, features, and technical use of products.
Industrial buyers are more aware of quality, delivery, services, pricing etc. of products. 23
Electronic Marketplace

• Catalog sites
• Vertical markets
• Spot markets
• Private exchanges
• Buying alliances
 Business Markets vs. Consumer Market

• Fewer Buyers
• Close supplier-customer relationship
• Multiple Buying Influences
• Derived Demand
• Inelastic substitutes
• Fluctuating Demand
 Summary
• The typical consumer decision making process consists
of the following sequence of events: problem
recognition, information research, evaluation of
alternatives, purchase decision and post purchase
behavior.
• Compared with consumer markets, business marketers
generally have fewer and larger buyers, a closer
customer supplier relationship, and more
geographically concentrated buyers. Demand in the
business market is derived from demand in the
consumer market and fluctuates with the business
cycle.