Principles of Marketing Handout

THEORIES AND CONCEPTS

Consumer and Business Market

The consumer market is described as the market that buys a product for their personal or end use.

The business market, on the other hand, is described as the market that buys a product for further processing
and then resells it to the market. They can also be described as the market that merely buys a product for
reselling to the market. For example, bookstores buy pencils from a pencil supplier to resell the pencil.
Bookstores, therefore, are considered as a business market.

The business market can be referred to as derived demand. This means that if there is no demand from the end
user (like a student who needs to buy pencil), then there will be no demand from the business market
(bookstore).

Businesses usually have a purchasing office or a purchasing officer that takes care of their business needs. Again
referring to the bookstore example, the bookstore will have a purchasing office or purchasing officer.

Adapted from saylor.org Academy, the table discusses the differences between the two markets.

The decision-making process for a business involves several persons in the business like the purchasing officer
mentioned in the previous paragraph. This makes the sales cycle lengthy and complex; thus, strong business to
business (B2B) relationships need to be developed.

Let us discuss theories that influence consumer behavior. These theories also hold true for business markets
because B2B markets to individuals acting for organizations.

Consumer Behavior
Consumer behavior is defined as the study of consumers and the processes they use to choose, use, or consume,
and dispose products and services,

Factors Influencing Consumer Behavior

Consumer behavior is influenced by different factors. These are the following:

a. Culture

Merriam-Webster defines culture as the totality of the inherited ideas, beliefs, values, and knowledge, which
constitute the shared bases of social action.

Culture, subculture, and social class influence consumer behavior.

An example of Filipino culture is our value for education. Since we value education, our behavior toward
education is positive. 

b. Social

Social factors, such as group, family, role, and status would influence consumer behavior.

An example of social influence in our behavior is peer pressure. Teenagers are said to be more vulnerable to
peer pressure.

 c. Personal

Personal factors like age, life stage, occupation, economic situation, lifestyle, personality, and self-concept will
influence behavior.

An example of personal factors as an influence in our behavior is personality. An introvert, for instance, would
most likely not

engage in social activities.

d. Psychological

Psychological factors like motivation, perception, learning, beliefs, and attitudes will influence behavior.

An example of psychological factor that influences behavior is the negative belief on Friday the 13th. Because of
this belief, some people will avoid traveling on Friday the 13th.
 With these factors influencing consumer behavior, researching about consumer is necessary.
Companies do research in the consumer market to yield creative ideas for product development

Another theory that is relevant in the study of consumer behavior is technology and the adopter categories.

Adopter Categories by Rogers

This theory explains the classification of individuals within a market based on how easily they adopt to
technology. The bell curve below illustrates this.

The shorter the time it takes for individuals to adopt to technology, the more innovative they are.

Rogers described five categories of adopters: 

1. Innovator-risk taker, high social status, financially liquid, social and interacts with innovators 
2. Early Adopter-opinion leaders, high social status, financially liquid, advanced education, more discreet in
adoption choices than innovators, central communication position 

3. Early Majority—takes longer to adopt technology, above average social status, interacts with early adopter 

4. Late Majority—skeptical on innovation, below average social status, little financial liquidity 

5. Laggards—last to adopt an innovation, have an aversion to change agents, lowest financial liquidity.

Innovativeness is only one of the characteristics that we can look at in understanding consumer behavior.
Another important consideration is the buying role.

Buying Roles

Buying role is defined as the function of a person associated with the purchase of a product. Adapted from
Marketing Teacher.com, the six main buying roles can be summarized as follows:

1. The Initiator—the person who decides to start the buying process 

2. The Influencer—the person who tries to convince others they need

the product

 3. The Decider—the person who makes the final decision to purchase 

4. The Buyer—the person who is going to write you the check 

5. The User—the person who ends up using your product, whether he had a say in the buying process or not 

6. The Gatekeeper—the person who has control on the flow of information, they facilitate the decision-making
process.

 Let us say, for example, you were informed in school that you will have a field trip to Enchanted Kingdom.
When you got home, you discussed this field trip with your family. You asked your mother if you can go, and
she directs your request to your father for his approval. Your sister says it was the field trip destination that she
also went to before.

THEORIES AND CONCEPTS

Marketing Research
A dynamic market is a description we can use in today's marketplace. New consumption behaviors are observed
every day and businesses a responding in different ways. A manifestation of this is the innovative product
offerings of telephone companies to new markets.

In general, businesses would like to know how consumers will respond to their marketing strategies; thus,
research is relied on when making strategic decisions.

Marketing research is a tool that helps marketers in understanding the following:

 consumer's segmenting behavior, so marketers can target better; 

 consumer's positioning behavior, so marketers can strongly define the mental image of their products
in the minds of their consumers; 
 consumer's product preference and choosing behavior, so marketers can improve their product
offerings; consumer's price responsiveness behavior, so marketers can improve their price offerings; 
 consumer's shopping behavior, so marketers can improve their store placements; 
 consumer's advertising responsiveness behavior, so marketers can improve their advertising
placements; and 
 consumer's sales promotion responsiveness, so marketers can improve their sales promotion offering.

Marketing research is defined as the process used to gather information, analyze, and report findings necessary
for marketing.

There are two kinds of research: primary research and secondary research.

1. Primary Research

In primary research, a researcher will gather first-hand information to achieve the research objective.

2. Secondary Research

In secondary research, a researcher will gather information from available internal records and external reports.

 Sources of internal research include product sales, customer usage rates, guarantee cards, customer
comments or complaints, sales people, research and development staff, and past research conducted.
 Sources of external secondary research include periodicals, specialist marketing reports, industry
magazines, chamber of commerce, government statistics, Internet, professional bodies, and trade
associations, among others.

Take note that the information from secondary research did not consider the research objective.

Types of Data and Research Methods

There are two types of data that you can collect when you do primary research: qualitative data and
quantitative data.

1. Qualitative Data-This is data that you get by probing. Information that you gather may include people's
opinions, attitudes, or perceptions on something. The data that will be gathered will have more depth from the
insider's perspective. This type of data makes minor use of numerical indices. Data is gathered through:

 Focus Group Discussion-This is made up of six to eight individuals that interact during the discussion;
the composition of individuals may be homogeneous or heterogeneous depending on the objective of
the research. These individuals are brought together by a moderator who asks questions that address
the research objective.
 In-depth Interview—This is conducted one on one. The interviewer asks questions to know more about
the inan

and his or her behavior toward the product.

 Ethnography_This is done through observation in their social setting to get a detailed account of the
behavior. Observation is systematic and long-term.
 Case Study—This is done through a detailed investigation of an individual or a group in their social
setting.

2. Quantitative Data—This is data that you get by asking structured questions; usual information includes basic
statistics information. The data that will be gathered will focus more on breadth to generalize. Its purpose is for
prediction or causal explanation. It reduces data to numerical indices. Data is gathered through the use of these
methods:

 Survey- This is done by identifying a sample that will represent. a population from which you will collect
your data. Data is gathered by using a survey questionnaire.
 Experiment- This is done in a scientific manner with the goal of verifying, refuting, or establishing the
validity of a hypothesis.
 Content Analysis. This is done by retrieving information from printed materials and artifacts and
identifying patterns and commonalities.

The appropriate method of research will depend on the objective of the research and the resources (time,
money, people, among others) available.

Steps in Marketing Research

1: Define the problem and objectives.

In defining the problem in marketing research we would like to determine consumer behavior toward a
marketing stimulus. Let us say that the problem statement is about the usage, attitude, and image of working
moms on a transport mobile application.

This problem statement has three components:

 Consumer behavior: usage, attitude, and image 

 Toward a stimulus: transport mobile application
  Consumer behavior of whom: working moms 

You will have to state the objectives for this problem statement:

 To describe the working moms in terms of demographics and psychographics application

 To describe the working moms' usage of a transport mobile application 
 To describe the working moms' attitude of a transport mobile application 
 To describe the working moms' image of a transport mobile application 
 To determine if there is a relationship between demographics and UAI

 To determine if there is a relationship between psychographics and UAI

Step 2: Obtain data.

This was discussed in the previous section. This will entail gathering either qualitative and/or quantitative data
considering the research objective and the resources available. 

Step 3: Analyze data.

The information gathered will be processed based on the objectives identified. 

Step 4: Recommend solutions.

This would include recommendations in terms of target marketing, positioning, and marketing strategies to
influence consumer behavior and the like. 

Step 5: Apply the results.

Decide if the recommendations will be used in the marketing strategies.

It is sometimes difficult to make your own survey questionnaire. Provided is an example you can refer to when
making your marketing survey instrument.

Sample Survey Questionnaire

I. Introduction

Greetings! I am Ms. Cruz doing a survey for Company X to ask about shopping behavior. May I take a few
minutes of your time to do the survey? If yes, proceed with the survey.

What do your friends call you?

II. Screening

Do you shop for clothing at least once a year? If yes, proceed with the survey.
III. Classification

1. How old are you?

2. Where do you study?

3. What is your club membership?

IV. Core

1. What do your friends call you?

2. Who chooses your clothes?

3. How many times in a year do you buy clothes?

4. On the average, how many pieces of clothing do you buy per purchase?

5. Designs that you find attractive: kid's design or

teenage design? Describe.

6. How much is your budget for a piece of clothing?

7. Do you have a Facebook account?

Thank you for your time.

This sample survey questionnaire is patterned after the component the UAI survey of Roberto (2006).

The UAI survey of Roberto covers four parts: introduction, screening core data portion, and classification data
portion.

In the UAI survey, the core data portion includes brand awareness brands used, shelf availability, attribute
importance, and brand rating question.

Today, with the current technology available, marketing research is easier. Online survey development
companies help marketers and researchers create and publish online surveys.

Let us now use our learning by answering the case reflection.