BMGT 411: Week #4
Chapters 5 - Consumer Markets
Chapter 6 - Business Markets
Chapter 7 - Marketing Segments and Targets
Chapter 3 - Markets and Consumers
Chapter 4 - Segmenting, Targeting and Positioning
BMGT 411: Chapter 5
Analyzing Consumer Markets
• How do consumer characteristics inﬂuence buying behavior?
• What major psychological processes inﬂuence consumer responses to
• How do marketers analyze consumer decision making?
What Inﬂuences Consumer Behavior?
• Consumer behavior—the study of how individuals, groups, and organizations
select, buy, and dispose of goods, services, ideas, or experiences to satisfy
their needs and desires.
• Cultural factors
• Social factors
• Personal factors
• Culture is the most fundamental determinant of a person’s wants and
• Consists of subcultures that provide more speciﬁc identiﬁcation and
socialization for their members.
• Social class—relatively homogeneous and enduring divisions in a society.
• Upper uppers
• Lower uppers
• Upper middles
• Middle class
• Working class
• Upper lowers
• Lower lowers
Income Gap in the US
Citi Hourglass Theory
• Reference groups—consist of all of the groups that have a direct or indirect
inﬂuence on a person’s attitudes or behavior.
• Membership groups (primary and secondary)—groups having direct inﬂuence:
family, friends, co-workers, neighbors
• Aspirational groups—those a person hopes to join
• Dissociative groups—those whose values or behavior an individual rejects
• Opinion leader—the person who offers informal advice or information about a
speciﬁc product or product category.
Social Media Opinion
• Life cycle stage
• Economic circumstances
Key Psychological Processes
• Freud’s Theory
• Behavior is guided by subconscious motivations.
• Maslow’s Hierarchy of Needs Theory
• Human needs are arranged in a hierarchy from most to least pressing—
physiological, safety, social, esteem, and self-actualization.
• Behavior is driven by lowest unmet need.
• Herzberg’s Two-Factor Theory
• The absence of dis-satisﬁers is not enough to motivate a purchase;satisﬁers
must be present.
Figure 5.1 Model of
•Perception—the process by which we select, organize,
and interpret information inputs to create a meaningful
picture of the world.
•Selective attention: Consumers can only absorb so
much information, that is why targeted marketing is
so key for ROI
•Selective distortion: Customers may interpret
information that ﬁts preconceptions
• Learning induces changes in our behavior arising from experience
• A ﬁrst positive experience with a brand is key to companies
• Drive—a strong internal stimulus that impels action.
• Cues—minor stimuli that determine when, where, and how a person
Five Stage Model of
• Use the above matrix to make a buying decision for the following items:
• A new PC
• Graduate School
• A New Car
Basic Concepts Underlying the Consumer
• Consumer is trying to satisfy a need.
• Consumer is looking for certain beneﬁts.
• Consumer sees each product as a bundle of attributes with varying abilities for delivering the
beneﬁts to satisfy this need.
• Belief—a descriptive thought a person holds about something.
• Attitude—enduring favorable or unfavorable evaluations, feelings, and action tendencies
toward some object or idea.
• Expectancy-value model—consumers evaluate products and services by combining their
brand beliefs according to importance.
BGMT 411: Chapter 6
Analyzing Business Markets
Boeing 787 Dreamliner, 3 Million Parts,
• What is the business market, and how does it differ from the consumer
• What buying situations do organizational buyers face?
• Who participates in the business-to-business buying process?
• How do business buyers make their decisions?
• How can companies build strong relationships with business customers?
• How do institutional buyers and government agencies do their buying?
• While these businesses all
operate in the B2C Space,
many B2B suppliers call on
these businesses and need to
market to them as well
• Can you think of any examples
of vendors that would market to
• IT Solutions
• Text Books
What is Organizational Buying?
• Organizational buying refers to the decision-making process by which formal
organizations establish the need for purchased products and services, and
identify, evaluate, and choose among alternative brands and suppliers.
Characteristics of Business Markets (Page
• Fewer, larger buyers
• Close supplier-customer
• Professional purchasing
• Many buying inﬂuences
• Multiple sales calls
• Derived demand
• Inelastic demand
• Fluctuating demand
• Geographically concentrated
• Direct purchasing
• Straight rebuy
• Reordering of supplies on a routine basis, usually with current
suppliers and automatic reorders
• Modiﬁed rebuy
• The buyer wants to change the product specs, prices, delivery, etc.
This usually opens the door to out suppliers
• New task
• Buys a new product or service for the ﬁrst time
The Buying Center
• Initiators: Those who request that something be purchased.
• Users: Those who will use the product or service. In many cases, the users initiate the buying
• Inﬂuences: People who inﬂuence the buying decision by deﬁning speciﬁcations and providing
information for evaluating alternatives. Technical personnel are particularly important inﬂuences.
• Decider: People who decide on product requirements and or on suppliers.
• Approvers: People who authorize the proposed actions of deciders or buyers.
• Buyers: People who have formal authority to select the supplier and arrange the purchase terms.
• Gatekeepers: People who have the power to prevent sellers or information from reaching to
members of the buying center. e.g. purchasing agents, receptionists, and telephone operators may
Concerns to Business Marketers
• Who are the major decision participants?
• What decisions do they inﬂuence?
• What is their level of inﬂuence?
• What evaluation criteria do they use?
Stages in the Buying Process: Buy phases
1.Problem recognition: Someone identiﬁes that a problem can be
solved by purchasing a new good or service
2.General need description: Buyer determines the items
characteristics and quantities needed
3.Product speciﬁcation: (PVA) Product Value Analysis, reducing the
cost to make a product
4.Supplier search: The buyer reaches out to suppliers or auction sites
Stages in the Buying Process: Buy phases
5.Proposal solicitation: Not all buyers ask for an RFP (Request for
Proposals) but government buyers must
6.Supplier selection: Final suppliers selected from the ﬁeld and
chosen by the buying process
7.Order-routine speciﬁcation: The ﬁnal order is placed with all details
•MRO: Maintenance, Repair, Operations
8.Performance review: Evaluating suppliers in a structured process, or
less structured, depending on the business
BMGT 411: Chapter 7
Identifying Market Segments and Targets
• In what ways can a company divide a consumer or business market into
• How should a company choose the most attractive target markets?
• What are the different levels of market segmentation?
Effective Targeting Requires…
• Identify and proﬁle distinct groups of buyers who differ in their needs and
• Select one or more market segments to enter
• Establish and communicate the distinctive beneﬁts of the market offering
What is a Market
A market segment consists of a
group of customers who share a
similar set of
needs and wants.
• Age and life cycle
• Life stage
• Social class
• Race and Culture
and The VALS Framework
Behavioral Segmentation Based on Needs and
Behavioral Segmentation: Behavioral Variables
1.Occasions: Time of day, week, month, year, or other deﬁned time in a consumers life
• Ex: Sheetz Breakfast
2.User Status: Non users, ex users, potential users, ﬁrst time users, regular users
Behavioral Segmentation: Behavioral Variables
3.Usage Rate: Light, Medium, and Heavy Product Users
4.Buyer Readiness Stage: Unaware, aware, informed, interested, desire, and intention to buy
• Hard Core Loyal's: Always buy one brand
• Split Loyal's: Loyal to two or three brands
• Shifting Loyal's: Shift from one brand to another
• Switchers: Not loyal to any brand
Effective Segmentation Criteria
• Measurable: The size, purchasing power, and characteristics of the segment can be
• Substantial: A segment is large and proﬁtable enough to serve
• Accessible: The segments can be effectively reached and served
• Differentiable: Distinguishable and respond differently to different marketing mix
• Actionable: Affective programs can be developed for attracting and serving these
Porter’s 5 Forces Model
Threat of Rivalry
Threat of Supplier
Threat of Buyer
Figure 7.3 Possible Levels
BMGT 411: Prep for Week 5
• Take the VAL’s Survey and Post your Results to the Blog: http://
• Read Chapters:
• Chapters 8 - Creating Brand Equity
• Chapter 9 - Brand Positioning
• Wood: Chapters: 4 (Continued) and 5