Organizational Buying Process

• The organizational buying process is how organizations establish a need for products/services, then identify, evaluate, and choose between brands/suppliers

Participants in the Organizational Buying Process

• Users are those who utilize the product or service
• Influencers directly impact buying decisions but do not make the final choice
• Deciders choose product requirements and suppliers
• Approvers authorize the actions proposed by deciders or buyers
• Buyers have the authority to select suppliers and arrange purchase terms
• Gatekeepers have the power to prevent sellers or information from reaching the buying center

Major Influencers on Organizational Buyers

• Environmental factors, such as the economy, heavily influence organizational buyers
• Organizational factors include specific objectives, policies, procedures, structures, and buying systems
• Interpersonal factors in the buying center include participants with differing interest, authority, and persuasiveness levels
• Individual factors like personal motivations, perceptions, and preferences influence each participant's buying decision

The Organizational Buying Decisions

• Problem recognition occurs when a company identifies a problem/need that can be solved by acquiring a good/service
• General needs description involves the buyer determining the requirements of the product
• Once general requirements are determined, product specifications are developed
• Supplier search involves the buyer identifying the most appropriate suppliers
• Qualified suppliers are then invited to submit proposals during proposal solicitation
• Supplier selection occurs after a meeting planner shortlists suppliers, and qualified hotels submit proposals
• Order-routine specification is when the buyer writes the final order, including all technical specifications
• The buyer does a post-purchase evaluation of the product during the performance review

Group Business Markets

• Conventions are annual association meetings that include general, committee, and special-interest sessions
• Association meetings sponsor various meeting types, including regional, special-interest, educational, and board meetings
• Corporate meetings are command performances for company employees
• Small groups are meetings of less than 50 people, gaining attention from hotels and chains
• Incentive travel serves as a reward for those achieving or exceeding a goal
• SMERF groups include:
  • Social
  • Military
  • Educational
  • Religious
  • Fraternal
• Group markets are segmented by meeting purpose
• Restaurants can also function as meeting venues

Target Marketing Process

• The Target Marketing Process involves:
  • Market Segmentation.
  • Market Targeting.
  • Market Positioning.
• Market segmentation dividing the market into distinct buyer groups with different needs, characteristics, or behaviors

Bases of Market Segmentation

• There is no single way to segment a market

• Marketers try different segmentation variables, alone or combined, to find the best market structure view

• These include:

  • Geographic Segmentation
  • Demographic Segmentation
  • Psychographic Segmentation
  • Behavioral Segmentation

• Geographic segmentation divides the market into different geographic units:

  • Nations
  • States
  • Regions
  • Countries
  • Cities
  • Neighborhoods

• Demographic segmentation divides the market into groups based on demographic variables:

  • Age
  • Gender
  • Family life cycle
  • Income
  • Occupation
  • Education
  • Religion
  • Race
  • Nationality

• Psychographic segmentation divides buyers into different groups based on:

  • Social Class
  • Lifestyle
  • Personality Characteristics

• Behavioral Segmentation divides and targets customers according to their behavior:

  • Usage
  • Loyalty
  • Occasion
  • Benefits

• Geographic segmentation involves customers within 1 km of a restaurant

• Demographic segmentation involves a university-level student

• Behavioral segmentation involves customers wanting a value for money

• Psychographic segmentation involves a customer who prefers to buy organic food

Requirements for Effective Segmentation

• Measurability: Being able to measure the segment's size and purchasing power
• Accessibility: Being able to access and serve the segment
• Substantiality: Segments must be large or profitable enough to serve
• Actionability: Being able to design effective programs to attract and serve the segments

Evaluating Market Segments

• Segment size and growth: Analyze the segment size/growth to choose the best opportunity
• Segment structural attractiveness: Examine major structural factors that affect long-run attractiveness
• Company objectives and resources: Consider the company's objectives and resources concerning market segments

Selecting Market Segments

• Segmentation reveals available market opportunities to business
• Companies then select the most attractive segment(s) to serve as target markets for marketing strategies

Market Segmentation Examples

• Segment A: Male/Female, ages 18-25, income P5,000-P10,000, comprises 60% of market
• Segment B: Male/Female, ages 26-35, income P1,000-P15,000, comprises 21% of market
• Segment C: Male/Female, ages 36-45, income P15,000-P20,000, comprises 11% of market
• Segment D: Male/Female, ages 45+, income P20,000+, comprises 8% of market

Marketing Strategies

• Undifferentiated Marketing (Mass Marketing)
  • The business targets the entire market, ignoring segments
  • Focuses on common customer needs/wants instead of differences
• Differentiated Marketing (Segmented)
  • The firm targets several market segments and designs separate offers for each segment
  • Products are designed and targeted in each segment with respective marketing plans
• Concentrated Marketing (Niche)
  • The business focuses on smaller segments/niches
  • Aims to achieve a strong market position within the niche

Market Coverage Strategy

• When choosing a market-coverage strategy, companies need to consider these factors:
  • Company Resources: Concentrated marketing makes the most sense with limited resources
  • Product Homogeneity: Differentiation/concentration suits products with design variations, like restaurants/hotels
  • Market Homogeneity: Undifferentiated marketing is important if buyers share the same tastes/reactions
  • Competitor Strategies: Undifferentiated marketing can be risky if competitors segment

Market Positioning

• Market positioning involves formulating competitive positioning for a product/detailed marketing mix
• A product position is defined by consumers based on important attributes
• It is also the place a product occupies in customer minds relative to competing products

Positioning Strategies

• Specific Product Attributes
• Price/product can be used to position a product
• Needs products fill/benefits product offer
  • Marketers can position products by the needs that product/services can fill
• Certain Classes of Users
  • Marketers can position for certain user classes, such as advertising a hotel as tailored to women
• Against an existing competitor A product can be positioned against the brand leader

Implementing a Position Strategy

• Involves these 3 steps:
  • Identify a set of potential competitive advantages
  • Select the right competitive advantages
  • Deliver the chosen position to the selected target market

Positioning Strategies

• Offer more for less
  • Offering good quality products at a low price
• Offer more for the same
  • Introducing new features/better performance for the same price
• Offer less for much less
  • Offering less product/service for a lower cost

Product Differentiation

• Hospitality companies must differentiate their products/services from competitors via:
  • Physical attributes
  • Service
  • Personnel
  • Location
  • Image

Selecting the Right Competitive Advantage

• Consider Best Quality, Best Service, Lowest Price, Best Value, or Best Location

Major Positioning Errors

• Underpositioning: Failing to position the company, so it has no special recognition
• Overpositioning: Giving buyers an overly narrow view of the company
• Confused Positioning: Leaving buyers with a confused company image

Selecting the Right Competitive Advantage

• Brand differences should be:
  • Important
  • Distinctive
  • Superior
  • Communicable
  • Preemptive
  • Affordable
  • Profitable
• Perceptual mapping is a research tool used to measure a brand's position
• Market segmentation, targeting, and positioning are essential for successful marketing