MGT301 Principles of Marketing Lecture-17

Summary of Lecture-16

Business Markets and Buying Behavior

Model of Business Buyer Behavior

Business Buying Situations

Modified Rebuy Straight Rebuy Business Buying Situations This CTR relates to the material on pp. 173-175. New Task Buying Major Types of Buying Situations Straight Rebuy. This is an industrial buying situation in which the buyer routinely reorders something without any modifications in the order. Marketers of industrial supplies seek to establish this type of relationship with the customer. When buyers place straight rebuys, competitors have little or no chance of making a sale. Modified Rebuy. This is an industrial buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. This increases the number of participants in the buying decisions thus increasing the combination of influences on the decision. "In" suppliers worry that competitors will gain some business. "Out" suppliers recognize the situation as an opportunity. New Task Buying. This is an industrial buying situation in which the buyer purchases a product or service for the first time. New task buying is the most complex of buying decision processes made by a company. It is also both the greatest opportunity and challenge to the marketer. Marketers must consider that new task buying situations often arise in response to still-emerging problems seeking solutions. Modified Rebuy Involved Decision Making Straight Rebuy

Major Influences on Business Buying Level of demand Economic outlook Interest rate Rate of techno- logical change Political and regulatory developments Competitive Social responsi- bility concerns Environmental Objectives Policies Procedures Organizational structures Systems Organizational Interests Authority Status Empathy Persuasive- ness Interpersonal Age Income Education Job position Personality Risk attitudes Culture Individual Business Buyer

Problem Recognition Product Specification Supplier Search General Need Description Product Specification Stages in Business Buying Process This CTR corresponds to Table 6-2 on p. 179 and relates to the material on pp. 179-184. Supplier Search Proposal Solicitation Supplier Selection Stages in Business Buying Problem Recognition. Problem recognition can result from internal or external stimuli. They may emerge from an identified shortage or ideas for improvements recognized by buyers. General Need Description. The buyer describes the overall characteristics and quantities of the needed item. For complex items, this step may require coordinating the efforts of many specialists. Product Specification. A developmental team must translate general needs into product specifications. An engineering value analysis team may look at alternative designs to reduce production costs. Supplier Search. The buyer conducts a search for the best vendors for the product specifications. Proposal Solicitation. The buyer invites qualified suppliers to submit proposals covering the terms of supply and support. Selected proposals may be asked to make formal presentations. Supplier Selection. The buyer selects suppliers based upon a combination of technical competence and service record and reputation. Negotiation of specific terms may occur before final selection, especially on price. Order Routine Specification. The buyer specifies the details of the supplier's contract listing technical specifications, delivery terms, policies for return and warranties, and quantities needed. Sellers will seek blanket contracts binding them closer to the buyer. Performance Review. The buyer will review how the supplier contract is working for the company and may continue, amend, or drop the seller. Order Routine Specification Performance Review

Today’s Topics

Market Segmentation

Shift from… Mass Marketing ………. Segmented Marketing

Two Basic Approaches Market Segmentation Approach The needs and preferences of the global market are viewed as heterogeneous varying from one group to another. Total Market Approach The needs and preferences of the entire, global market are regarded as relatively homogeneous.

Major Steps in Target Marketing Segmentation Target Marketing Market Positioning

Market Segmentation Target Marketing Market Positioning Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Target Marketing The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers

Steps in Market Segmentation, Targeting, and Positioning

Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment

Segmenting Consumer Markets

What is Market Segmentation?

Segmentation is breaking down heterogeneous mass market into more homogeneous submarkets Consumers within segments should respond similarly to particular marketing actions Consumer response should be different between segments

Why segment the market? Diverse needs, wants and buying behaviors differ One firm cannot satisfy everyone’s needs Different strengths and competitive advantages Focus on what they do best Better marketing opportunities More profitable

Segmentation

Segmentation Variables Geographical segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

Geographical Segmentation

Dividing a market into different geographical units such as nation, province, regions, countries, cities or neighborhoods

Geographic Segmentation Variables

World Region or Country Province City Neighborhood City or Metro Size Density Climate

Demographic Segmentation Dividing the market into groups based on demographic variables such as age, gender, etc.

Demographic Segmentation Variables

Occupation Education Religion Race Generation Nationality Age Gender Family size Family life cycle Income

Psychographic Segmentation Dividing a market into different groups based on social class, personality etc.

Psychographic Segmentation Variables Social class Lifestyle Personality

Behavioral Segmentation

Dividing a market into groups based on consumer knowledge, attitude etc.

Behavioral Segmentation Variables

Occasions Benefits User Status Attitude Toward the Product User Rates Loyalty Status Readiness Stage

Enough for today. . .

Summary Market Segmentation

Segmentation

Major Steps in Target Marketing Segmentation Target Marketing Market Positioning

Segmentation Variables Geographical segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

Market Segmentation (cont..) Next…. Market Segmentation (cont..)

MGT301 Principles of Marketing Lecture-17