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Session 10   MG 220 BBA - 8 Sep 10
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Session 10 MG 220 BBA - 8 Sep 10

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Session 10 …

Session 10
MG 220 Marketing Management
BBA 09

Published in Business
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  • 1. Part 3: Connecting with Customers
    > The Buying Decision Process: The Five-stage Model
    > What is Organizational Buying?
    > Participants in the Business Buying Process
    > Stages in the Buying Process
    > Institutional and Government Markets
    Class Presentation | Session 10 | 8 Sep 2010
  • 2. The Buying Decision Process
    The Five-Stage Model
    A Psychological Processwhich needs to beunderstood by Marketers
    MG 220 Marketing Management
    2
  • 3. The Buying Decision ProcessStage 1: Problem Recognition
    A buyer recognizes a problem……i.e. “a need”
    Either stimulated by
    Internal Stimuli (Hunger, Thirst, Tiredness)
    External Stimuli (Seeing an ad)
    Marketers:
    Need to identify circumstances that trigger a particular need
    Can Devise campaigns to generate external stimuliParticularly for high-end, luxury items
    MG 220 Marketing Management
    3
  • 4. The Buying Decision ProcessStage 2: Information Search
    An aroused/interested consumer will be inclined to search for more information
    Now (s)he wants to buy and is looking for information
    Two levels of interest:
    Milder: Heightened Attention (pays attention to communication)
    Sharper: Active information search (finding information)
    Information sources:
    Personal
    Commercial (most frequent)
    Public
    Experiential
    Role of internet
    Information Sets(buying a LCD)
    MG 220 Marketing Management
    4
  • 5. The Buying Decision ProcessStage 3: Evaluation of Alternatives
    While buying a consumer is:
    Trying to satisfy a need
    Looking for certain benefits from the product solution
    Seeing each product as a bundle of attributes with varying abilities for delivering the benefits
    Consumers pay most attention to products that deliver sought-after benefits
    Beliefs & Attitudes
    Evaluation reflects Beliefs & Attitudes
    People’s beliefs and attitudes affect their buying behavior
    Expectancy-Value Model
    Consumers Evaluate Products/Services by combining their brand beliefs – positives and negatives – according to importance
    Weighted Rating
    MG 220 Marketing Management
    5
  • 6. The Buying Decision ProcessStage 4: Purchase Decisions
    Five decisions during actual purchase:
    Brand
    Source/Shop/Retailer/Dealer
    Quantity
    Timing
    Payment Method
    Further Considerations
    Non-Compensatory Models of Consumer Choice
    Consumers not necessarily make exact choices
    They take “mental shortcuts”
    Intervening Factors
    Attitude of Others
    Unanticipated Situational Factors
    Different [perceived] risks
    Functional (does not perform up to expected)
    Physical (it can harm)
    Financial (may not be worth it)
    Social (embarrassing in front of others)
    Psychological (affects psychologically)
    Time (if product fails, time is wasted for a better alternative)
    MG 220 Marketing Management
    6
  • 7. The Buying Decision ProcessStage 5: Post-Purchase Behavior
    Impacts future engagement of customer
    Post-Purchase Satisfaction
    Satisfaction depends on expectation
    Post-Purchase Actions
    Subsequent re-buy or abandoning (forever may be)
    Telling to others
    Post-Purchase Use & Disposal
    Sales Frequency depends on product consumption rateQuickly finished => Quick re-buying
    Also observe how they “dispose” it.
    MG 220 Marketing Management
    7
  • 8. Other Theories of Consumer Decision Making
    Buying Process is not as structured and planned like this always.
    It may vary a lot and there are other theories (always evolving) to understand it.
    Not covered in syllabus of this course
    MG 220 Marketing Management
    8
  • 9. What is Organizational BuyingBusiness Market vs. Consumer Market
    Fewer, larger buyers
    Close supplier-customer relationships
    Professional purchasing
    Many buying influences
    Multiple sales calls
    Derived demand
    Inelastic demand
    Fluctuating demand
    Geographically concentrated buyers
    Direct purchasing
    MG 220 Marketing Management
    9
  • 10. What is Organizational BuyingBuying Situations
    Suppliers
    In-Suppliers: Those who are on approved list and are selling to the company
    Out-Suppliers: Those who are trying to penetrate
    Situations
    Straight Re-Buy
    Ordering again with same specs
    Generally to same seller or in-sellers
    Out-Sellers try to do something “new” to enter
    Modified Re-Buy
    Revised specs or requirements in any form
    New suppliers may be called | Critical for In-Suppliers
    New Task
    Buying for the first time
    Complete process is carried out starting from developing specs and requirements
    Strong evaluations and multiple reviews etc.
    MG 220 Marketing Management
    10
  • 11. What is Organizational BuyingSystems Buying and Selling
    Systems Buying: Buying a complete solution from a supplier/seller
    Going for Turnkey solution
    May even involve Systems Contracting – Even providing repairing & maintenance as part of sales
    Sales of F-16s to Pakistan from USA includes?
    MG 220 Marketing Management
    11
  • 12. Participants in the Business Buying ProcessThe Buying Center
    Buying Center
    All those individuals and groups who participate in purchasing decision-making process in any of following roles:
    Initiatorswho request purchase – may be “users”
    UsersWho are going to use the product/services directly
    InfluencersWho develop specs or influence buying process – technical teams, accounts, finance etc
    DecidersWho decide specs, requirements or suppliers
    ApproversHaving authority to approve
    BuyersWho execute the “purchase” process
    GatekeepersWho can prevent information/suppliers to reach to right person(s) Consider: a security guard or telephone operator not letting you in!
    MG 220 Marketing Management
    12
  • 13. Participants in the Business Buying ProcessBuyer Center Targeting
    Buying Center Targeting
    is all about understanding the buyer – their criterion, their requirements, their processes etc.
    Key types of business consumers
    Price-oriented customers | Transaction SellingPrice is everything
    Solution-oriented customers | Consultative Selling Going for solution and will listen to arguments for price vs. services/solution
    Gold-Standard customers | Quality Selling Want best performance, quality, specs, service etc.
    Strategic-value customers | Enterprise Selling Fairly permanent relationship – rather than just a buying activity
    MG 220 Marketing Management
    13
  • 14. Participants in the Business Buying ProcessBuyer Center Targeting (…contd.)
    Solution Selling
    Offer a complete “solution”
    Helps alleviate pricing pressure
    Helps becoming exclusive
    Key examples
    Solutions to enhance customer revenues
    Solutions to decrease customer risks
    Solutions to reduce customer costs
    MG 220 Marketing Management
    14
  • 15. Stages in Buying Process
    Typical Stages
    Problem Recognition
    General Need Description
    Product Specification
    Supplier Search
    Proposal Solicitation
    Supplier Selection
    Order-Routine Specification
    Performance Review
    MG 220 Marketing Management
    15
  • 16. TOPICS IN CHAP 7
    Purchasing/Procurement Process
    Managing Business-to-Business Customer Relationships
    Institutional and Government Markets
    Not covered in syllabus of this course
    MG 220 Marketing Management
    16
  • 17. Part 3: Connecting with Customers
    > Overall Review of Chap 5,6 & 7
    > Levels of Market Segmentation
    > Segmenting Consumer Markets
    > Quiz 3 (Chap 5-7 | Session 8-10)
    Class Presentation | Session 11 | 15 Sep 2010