Strategic Marketing: Consumer Behavior

Strategic Marketing: Consumer Behavior and Industrial Markets

• Consumer Behavior & Industrial Markets: A crucial aspect of strategic marketing is understanding the behaviors of both consumers and industrial markets.

Characteristics of Business Markets

• Definition of Business Market: All organizations that purchase goods and services for use in producing other products, reselling, or renting are part of the business market.

• Market Structure & Demand: A defining characteristic of business markets is a smaller number of larger buyers. Markets are often geographically concentrated. demand is often derived (dependent on demand for other products) and inelastic (little change in response to price changes, especially short-term).

• Nature of the Buying Unit: Decisions in business markets typically involve multiple participants (e.g., technical experts, top management), requiring a professional, comprehensive purchasing approach. The complexity of the purchase is a key factor driving the number of participants.

• Types of Decisions: Business purchasing decisions frequently involve significant financial commitments, complex technical and economic considerations, and interaction among numerous people. Decisions are highly formalized and often involve detailed product specifications, written purchase orders, and supplier approval processes.

The Business Buying Process

• Definition of Business Buyer Behavior: Business buyer behavior refers to the buying behavior of organizations that purchase goods and services for use in production or for resale.

• Problem Recognition: This is the initial stage, where someone within the organization identifies a need or problem that can be solved with a product or service. Internal or external stimuli can trigger this.

• General Need Description: Describing the characteristics and quantity required of the item or service are documented at this stage. Information from other departments (production, accounting, etc.) is collected.

• Product Specifications: The buying organization develops detailed specifications for the needed product. Value analysis is a critical step in this process.

• Supplier Search: Finding potential vendors that meet the specified requirements. This process's level of effort depends on factors like the newness of the item purchased, complexity, and cost.

• Proposal Solicitation: Qualified suppliers are invited to submit detailed proposals. Various forms of proposals are possible, ranging from ad-hoc to price lists.

• Supplier Selection: Evaluation of potential suppliers based on multiple criteria like quality, price, after-sales support, etc.. Ranked and chosen.

• Order-Routine Specification: Formalizing the purchase order, specifying quantities and timing delivery. Essential steps include returns and warranties.

• Performance Review: Once the product or service is in use, evaluating its performance and customer satisfaction. This stage assesses whether the product meets expectations or whether changes are needed.

Types of Buying Situations

• Straight Rebuy: Repurchasing the exact same product with no alterations.

• Modified Rebuy: Purchaser wants to modify product specifications, pricing, or terms.

• New Task: Initiating a completely new purchase that involves substantial risk, considerable information gathering, and input from a large number of people.

Participants in Business Purchasing

• Users: Use the product or service.

• Influencers: Shape the process.

• Buyers: Formal authority to select suppliers.

• Deciders: Final authority to approve purchase.

• Gatekeepers: Control the flow of information to others

Major Influences on Business Buying

• Environmental: Economic, supply conditions, technological changes, political factors, competitive forces.

• Organizational: Objectives, policies, organizational structure, systems.

• Interpersonal: Authority, status, empathy, persuasive nature.

• Individual: Age, income, education, job position, personality, risk tolerance

This quiz focuses on the crucial aspects of strategic marketing, specifically examining consumer behavior and the dynamics of industrial markets. Understand key concepts such as market structure, demand characteristics, and the nature of buying units within business markets.