Professional Certificate in Marketing Welcome to Customer Communications 15 January 2007

Decision Making Process Environmental influences Marketing Mix influences Psychological factors: Motivation Beliefs Attitudes Perceptions Learning Cultural groups Social class Family groups Reference groups: Membership Aspirant Dissociative D.M.U’s Product Place Price Promotion + People Process Physical evidence Recognition of problem Search for information Evaluation of alternatives Purchase decision Post-purchase evaluation Individual influences Group influences Social/cultural Technological Economic Ecological Political Legal Ethical

Psychological factors:

Motivation

Beliefs

Attitudes

Perceptions

Learning

Cultural groups

Social class

Family groups

Reference groups:

Membership

Aspirant

Dissociative

D.M.U’s

Product

Place

Price

Promotion

+

People

Process

Physical evidence

Social/cultural

Technological

Economic

Ecological

Political

Legal

Ethical

Decision Making Process How the DMP is driven depend on customers’ perception of risk about the purchase: Performance risk Physical risk Ego risk Social risk Time risk Financial risk

How the DMP is driven depend on customers’ perception of risk about the purchase:

Performance risk

Physical risk

Ego risk

Social risk

Time risk

Financial risk

Decision Making Process Level of perceived risk determines involvement level in the purchase: Low-involvement purchases Frequent purchases, usually inexpensive Baked beans, detergents, High-involvement purchases Infrequent purchases, usually “big-ticket” Cars, insurance policies, domestic appliances

Level of perceived risk determines involvement level in the purchase:

Low-involvement purchases

Frequent purchases, usually inexpensive

Baked beans, detergents,

High-involvement purchases

Infrequent purchases, usually “big-ticket”

Cars, insurance policies, domestic appliances

Decision Making Process This leads to three types of consumer decision-making: Extended problem-solving Speciality goods Limited problem-solving Shopping goods Routine problem-solving Convenience goods

This leads to three types of consumer decision-making:

Extended problem-solving

Speciality goods

Limited problem-solving

Shopping goods

Routine problem-solving

Convenience goods

B2C v B2B

B2B Marketing Characteristics of B2B markets Fewer but larger buyers Demand often derived from consumer demand - e.g. car industry buys steel because consumers buy cars Buying unit differs - more rational approach, more people involved Buying process usually more formalised

Characteristics of B2B markets

Fewer but larger buyers

Demand often derived from consumer demand - e.g. car industry buys steel because consumers buy cars

Buying unit differs - more rational approach, more people involved

Buying process usually more formalised

B2B Decision Making Unit User end user, may initiate request and help specify Influencer technical personnel or specialists, help specify, provide information Buyer formal authority holders, help specify, select vendors, negotiate Decider final approver (often also buyer) Financier Budget-holder for that purchase Gatekeeper control information flow to others, can prevent sales people gaining access

User

end user, may initiate request and help specify

Influencer

technical personnel or specialists, help specify, provide information

Buyer

formal authority holders, help specify, select vendors, negotiate

Decider

final approver (often also buyer)

Financier

Budget-holder for that purchase

Gatekeeper

control information flow to others, can prevent sales people gaining access

Types of B2B buying decision Straight re-buy goods re-ordered without modification Modified re-buy opportunity for competitors to enter discussions, essential service quality is good New buy greater risk or cost, the fuller decision making unit involved

Straight re-buy

goods re-ordered without modification

Modified re-buy

opportunity for competitors to enter discussions, essential service quality is good

New buy

greater risk or cost, the fuller decision making unit involved

B2B v B2C B2B customers Purchase products to meet specific business needs Emphasize economic benefits Use formal, lengthy purchasing policies and processes Involve large groups in purchasing decisions Buy large quantities infrequently Consumer customers Purchase products to meet individual or family needs Emphasize psychological benefits Buy on impulse or with minimal processes Purchase as individuals or as a family unit Buy small quantities frequently

B2B customers

Purchase products to meet specific business needs

Emphasize economic benefits

Use formal, lengthy purchasing policies and processes

Involve large groups in purchasing decisions

Buy large quantities infrequently

Consumer customers

Purchase products to meet individual or family needs

Emphasize psychological benefits

Buy on impulse or with minimal processes

Purchase as individuals or as a family unit

Buy small quantities frequently

B2B v B2C B2B customers Want a customised product package Experience major problems if supply fails Find switching suppliers difficult Negotiate on price Purchase direct from suppliers Justify an emphasis on personal selling Consumer customers Content with standardised product packages Experience minor irritation is supply fails Find switching suppliers easy Accept stated price Purchase from intermediaries Justify an emphasis on mass media

B2B customers

Want a customised product package

Experience major problems if supply fails

Find switching suppliers difficult

Negotiate on price

Purchase direct from suppliers

Justify an emphasis on personal selling

Consumer customers

Content with standardised product packages

Experience minor irritation is supply fails

Find switching suppliers easy

Accept stated price

Purchase from intermediaries

Justify an emphasis on mass media

“ Homework” For the three customer segments you identified last week: Analyse their buying behaviour Level of perceived risk? Level of involvement? How does that influence the DMP? What are the main factors that influence that behaviour? What (if any) DMU members are involved in the process?

For the three customer segments you identified last week:

Analyse their buying behaviour

Level of perceived risk?

Level of involvement?

How does that influence the DMP?

What are the main factors that influence that behaviour?

What (if any) DMU members are involved in the process?