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Session 9 mg 220 mba - 20 sep 10


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Session 9
MG 220 Marketing Management
MBA 10

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Session 9 mg 220 mba - 20 sep 10

  1. 1. Part 3: Connecting with Customers<br />> The Buying Decision Process: The Five-stage Model<br />> What is Organizational Buying?<br />> Participants in the Business Buying Process<br />> Stages in the Buying Process<br />> Institutional and Government Markets<br />Class Presentation | Session 9 | 20 Sep 2010<br />
  2. 2. The Buying Decision Process<br />The Five-Stage Model<br />A Psychological Processwhich needs to beunderstood by Marketers<br />MG 220 Marketing Management<br />2<br />
  3. 3. The Buying Decision ProcessStage 1: Problem Recognition<br />A buyer recognizes a problem……i.e. “a need”<br />Either stimulated by<br />Internal Stimuli (Hunger, Thirst, Tiredness)<br />External Stimuli (Seeing an ad)<br />Marketers:<br />Need to identify circumstances that trigger a particular need<br />Can Devise campaigns to generate external stimuliParticularly for high-end, luxury items<br />MG 220 Marketing Management<br />3<br />
  4. 4. The Buying Decision ProcessStage 2: Information Search<br />An aroused/interested consumer will be inclined to search for more information<br />Now (s)he wants to buy and is looking for information<br />Two levels of interest:<br />Milder: Heightened Attention (pays attention to communication)<br />Sharper: Active information search (finding information)<br />Information sources:<br />Personal<br />Commercial (most frequent)<br />Public<br />Experiential<br />Role of internet<br />Information Sets(buying a LCD)<br />MG 220 Marketing Management<br />4<br />
  5. 5. The Buying Decision ProcessStage 3: Evaluation of Alternatives<br />While buying a consumer is:<br />Trying to satisfy a need<br />Looking for certain benefits from the product solution<br />Seeing each product as a bundle of attributes with varying abilities for delivering the benefits<br />Consumers pay most attention to products that deliver sought-after benefits<br />Beliefs & Attitudes<br />Evaluation reflects Beliefs & Attitudes<br />People’s beliefs and attitudes affect their buying behavior<br />Expectancy-Value Model<br />Consumers Evaluate Products/Services by combining their brand beliefs – positives and negatives – according to importance<br />Weighted Rating<br />MG 220 Marketing Management<br />5<br />
  6. 6. The Buying Decision ProcessStage 4: Purchase Decisions<br />Five decisions during actual purchase:<br />Brand<br />Source/Shop/Retailer/Dealer<br />Quantity<br />Timing<br />Payment Method<br />Further Considerations<br />Non-Compensatory Models of Consumer Choice<br />Consumers not necessarily make exact choices<br />They take “mental shortcuts”<br />Intervening Factors<br />Attitude of Others<br />Unanticipated Situational Factors<br />Different [perceived] risks<br />Functional (does not perform up to expected)<br />Physical (it can harm)<br />Financial (may not be worth it)<br />Social (embarrassing in front of others)<br />Psychological (affects psychologically)<br />Time (if product fails, time is wasted for a better alternative)<br />MG 220 Marketing Management<br />6<br />
  7. 7. The Buying Decision ProcessStage 5: Post-Purchase Behavior<br />Impacts future engagement of customer<br />Post-Purchase Satisfaction<br />Satisfaction depends on expectation<br />Post-Purchase Actions<br />Subsequent re-buy or abandoning (forever may be)<br />Telling to others<br />Post-Purchase Use & Disposal<br />Sales Frequency depends on product consumption rateQuickly finished => Quick re-buying<br />Also observe how they “dispose” it.<br />MG 220 Marketing Management<br />7<br />
  8. 8. Other Theories of Consumer Decision Making<br />Buying Process is not as structured and planned like this always.<br />It may vary a lot and there are other theories (always evolving) to understand it.<br />Not covered in syllabus of this course<br />MG 220 Marketing Management<br />8<br />
  9. 9. What is Organizational BuyingBusiness Market vs. Consumer Market<br />Fewer, larger buyers<br />Close supplier-customer relationships<br />Professional purchasing<br />Many buying influences<br />Multiple sales calls<br />Derived demand<br />Inelastic demand<br />Fluctuating demand<br />Geographically concentrated buyers<br />Direct purchasing<br />MG 220 Marketing Management<br />9<br />
  10. 10. What is Organizational BuyingBuying Situations<br />Suppliers<br />In-Suppliers: Those who are on approved list and are selling to the company<br />Out-Suppliers: Those who are trying to penetrate<br />Situations<br />Straight Re-Buy<br />Ordering again with same specs<br />Generally to same seller or in-sellers<br />Out-Sellers try to do something “new” to enter<br />Modified Re-Buy<br />Revised specs or requirements in any form<br />New suppliers may be called | Critical for In-Suppliers<br />New Task<br />Buying for the first time<br />Complete process is carried out starting from developing specs and requirements<br />Strong evaluations and multiple reviews etc.<br />MG 220 Marketing Management<br />10<br />
  11. 11. What is Organizational BuyingSystems Buying and Selling<br />Systems Buying: Buying a complete solution from a supplier/seller<br />Going for Turnkey solution<br />May even involve Systems Contracting – Even providing repairing & maintenance as part of sales<br />Sales of F-16s to Pakistan from USA includes?<br />MG 220 Marketing Management<br />11<br />
  12. 12. Participants in the Business Buying ProcessThe Buying Center<br />Buying Center<br />All those individuals and groups who participate in purchasing decision-making process in any of following roles:<br />Initiatorswho request purchase – may be “users”<br />UsersWho are going to use the product/services directly<br />InfluencersWho develop specs or influence buying process – technical teams, accounts, finance etc<br />DecidersWho decide specs, requirements or suppliers<br />ApproversHaving authority to approve<br />BuyersWho execute the “purchase” process<br />GatekeepersWho can prevent information/suppliers to reach to right person(s) Consider: a security guard or telephone operator not letting you in!<br />MG 220 Marketing Management<br />12<br />
  13. 13. Participants in the Business Buying ProcessBuyer Center Targeting<br />Buying Center Targeting<br /> is all about understanding the buyer – their criterion, their requirements, their processes etc.<br />Key types of business consumers<br />Price-oriented customers | Transaction SellingPrice is everything<br />Solution-oriented customers | Consultative Selling Going for solution and will listen to arguments for price vs. services/solution<br />Gold-Standard customers | Quality Selling Want best performance, quality, specs, service etc. <br />Strategic-value customers | Enterprise Selling Fairly permanent relationship – rather than just a buying activity<br />MG 220 Marketing Management<br />13<br />
  14. 14. Participants in the Business Buying ProcessBuyer Center Targeting (…contd.)<br />Solution Selling<br /> Offer a complete “solution”<br /> Helps alleviate pricing pressure<br /> Helps becoming exclusive<br />Key examples<br />Solutions to enhance customer revenues<br />Solutions to decrease customer risks<br />Solutions to reduce customer costs<br />MG 220 Marketing Management<br />14<br />
  15. 15. Stages in Buying Process<br />Typical Stages<br />Problem Recognition<br />General Need Description<br />Product Specification<br />Supplier Search<br />Proposal Solicitation<br />Supplier Selection<br />Order-Routine Specification<br />Performance Review<br />MG 220 Marketing Management<br />15<br />
  16. 16. TOPICS IN CHAP 7<br />Purchasing/Procurement Process<br />Managing Business-to-Business Customer Relationships<br />Institutional and Government Markets<br />Not covered in syllabus of this course<br />MG 220 Marketing Management<br />16<br />
  17. 17. Part 3: Connecting with Customers<br />> Overall Review of Chap 5,6 & 7<br />> Levels of Market Segmentation<br />> Segmenting Consumer Markets<br />> Quiz 3 (Chap 5-7 | Session 7-9)<br />Class Presentation | Session 10 | 23 Sep 2010<br />