Chapter 6:
Understand Consumer and Business Markets
Consumer decision process:
- Need/ Problem recognition 💡
• can connect to Motivation theory
• needs to satisfy - Information search 🗨
• Friends/ Family can recommend
• Past exp. to assist in solving problem - Evaluation of alternatives 👓
• Determined what will satisfy their want or need
• Seek out best deal (price, quality etc.) - Purchase decision 🤔
• Decide on what they will purchase and where - Post-purchase assessment 😃☹
Personal Characteristics
Life Cycle Stage
• Family life cycle (FLC)
• Changes in life stage transform an individual’s buying habit
Occupation
• People are influenced by their work environment.
• From the executive suite to the plant floor, people who work together tend to buy and wear similar clothes, shop at the same stores, and vacation at the same places.
Lifestyle
• An individual’s perspective on life and manifests itself in that person’s activities, interests, and opinions (AIO).
Gender Roles
• Generally, women have been adding new roles as they move into the workforce and positions of political power.
• E.g.: In the US, this means that men and women are more likely to share responsibilities than live in a traditional household where the men work and women stay at home to raise the children.
Psychological Attributes
Perception
Learning
Attitude
Personality
Motivation 
The stimulating power that induces and then directs behavior.
Maslow's Hierarchy of Needs theory
Herzberg's Two Factor theory
Aldelfer's ERG theory
McClelland's Achievement Motivation theory
A learned disposition (nature) to respond to an object or class of objects in a consistently favorable or unfavorable way.
A process to select, organize, and interpret information
Selective Awareness
Selective Distortion
Selective Retention
A relatively permanent change in behavior caused by experience.
Conditioning
• Classical conditioning
• Operant conditioning
Cognitive learning
A set of consistent, enduring personal characteristics used to identity the differences between individuals
External Factors shape Consumer Choices
Social 👥
Culture 🌍 🎏
A system of values, beliefs, and morals shared by a particular group of people that permeate over time.
Situational
Situational factors:
• Physical surroundings
• Personal circumstances
• Time
Differences between Business and Consumer Markets
• Relationship with Customers
• Number & size of Customers
• Complexity of Buying Process
• Complexity of Supply Chain
• Demand for Products
B2B Market
• Invest more in maintaining personal relationships
• Few but larger customers
• Strategically located for buyers
• Complexed
• Direct from supplier
• Derived from consumer demand
Consumer Market
• Impersonal
• Many but fewer in quantities
• Anywhere in the world
• Fewer people - based on personal &psychological benefits
• Based on needs mitigated by environmental factors & marketing stimuli
Demand for P&S in a Business Market
3 dimensions:
1. Derived demand
• more inputs if consumers are buying finished products
2. Fluctuating demand
3. Inelastic demand
• Producers buy raw materials even if ⬆💰
Buying Centers
Definition
Participants
A number of individuals with a stake in the purchase decision come together to form a buying center that manages the purchase decision process and ultimately makes the decision.
Initiator: Starts the process 💡
Influencer: Affects decision 🗣
Users: Actual consumer 🛍
Gatekeeper: Controls access to key participants in the process 🚪
Decider: Responsible for making final decision 👔
Business decision process
1. Define the need & product specifications
• Product specifications should be clearly defined so that everyone inside and outside the firm understand
• Request for proposal (RFP) should achieve the details needed.
2. Search for Suppliers
• Company creates a list of preferred or approved suppliers OR search for & identify potential suppliers
3. Seek Sales Proposals in response to the RFP
• Request from a number of vendors.
• Good to get more information even when there's a preferred vendor (helps in negotiating)
• RPF Specifies how the vendors products meet the specs and provides additional information