Lecture 6 International Business MARKEC04 PDF

International Business Marketing MARKEC04 A-cluster (1st year, 1st semester) Lecture 6 / 2024-2025 Understanding Consumer and Business Markets Marketing: Real People, Real Choices Eleventh Edition, Global Edition...

International Business Marketing MARKEC04 A-cluster (1st year, 1st semester) Lecture 6 / 2024-2025 Understanding Consumer and Business Markets Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 6 Understand Consumer and Business Markets Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Learning Objectives 6.1 Define consumer behavior, and explain the purchase decision-making process. 6.2 Explain how internal factors influence consumers’ decision-making processes. 6.3 Show how situational factors and consumers’ relationships with other people influence consumer behavior. 6.4 Understand the characteristics of business-to-business markets and how marketers classify business-to-business customers. 6.5 Identify and describe the different business purchase situations and the business buying decision process, including the use of e-commerce and social media. 6.6 Understand what prospective employers are looking for in an employee and how you can meet their needs, thus increasing your chances that employer will “buy” or hire you. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Consumer Decision-Making Process Consumer behavior is the process individuals or groups go through to select, purchase, use and dispose of goods, services, ideas or experiences to satisfy their needs and desires. Decision- making behaviors are influenced by a variety of factors. – Internal, situational, and social factors influence consumer behavior. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Not All Decisions Are the Same Amount of effort expended in decision making varies according to the: – Level of involvement – Perceived risk Consumers use different approaches depending on the amount of effort. – Habitual decision making – Extensive problem solving – Limited problem solving Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Consumer Decision-Making Continuum Decisions characterized as extensive problem solving versus habitual decision making differ in a number of ways. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Consumer Decision-Making Process Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 1: Problem Recognition Occurs whenever a consumer sees a significant difference between his or her current state of affairs and some desired or ideal state – Marketing can trigger problem recognition and facilitate consumer progression through decision process. What are some other ways marketers stimulate problem recognition? – for a new SUV? – for a new pair of jeans? – for coming back to school for another degree? Copyright © 2023 Pearson Education Ltd. All Rights Reserved.  9 Group Activity Marketing activities can create problem recognition, by showing consumers benefits of a new product or pointing out problems with products they already own Suggest a creative way to stimulate problem recognition. Outdoor kitchen/BBQ Smartwatch Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 2: Information Search Consumers need adequate information to make good decisions. Search includes discovering alternatives available. – Evoked set – Consideration set Consumers search memory and environment for information. – If information is inadequate, consumers seek out additional sources, frequently using the Internet. Online Search /www.google.com/ /www.bing.com/ /www.pricegrabber.com/ /www.bizrate.com/ Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 3: Evaluation of Alternatives Identifying a small number of products for closer consideration – Determinant attributes: most important features – Evaluative criteria: dimensions consumers use to compare competing product alternatives It seems logical that information search and evaluation of alternatives must occur somewhat simultaneously, especially in extensive problem solving. Can you explain a decision you have made when information search and evaluation of alternatives occurred together? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Discussion Do you agree that having too many choices is a bigger problem than not having enough choices? Is it possible to have too much of a good thing? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. 12 Step 4: Product Choice Consumers often rely on mental shortcuts, or heuristics, in making decisions. For extended problem solving decisions, may use compensatory decision rules in which strength on one attribute may compensate for a weakness in another. Heuristics are rules of thumb used by individuals to arrive at good decision with less mental effort: – Price equals quality – Brand loyalty – Country of origin Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 5: Postpurchase Evaluation Consumer satisfaction/dissatisfaction following purchase of product is critical. – Level of satisfaction is influenced by whether or not expectations of quality are met or exceeded. – Marketing communications must create accurate expectations for the product. – Buyer’s remorse is common. What are some things candy bar marketers could do to reduce your buyer’s remorse after eating a candy bar? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Consumer Decision-Making Process Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Perception Copyright © 2023 Pearson Education Ltd. All Rights Reserved. An Overview of the Perceptual Process Sensory Stimuli Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Internal Influences on Consumers’ Decisions: Perception Perception is the process by which we select, organize, and interpret information from the outside world. Three factors are necessary for perception to occur: – Exposure: extent to which a person’s sensory receptors are capable of registering a stimulus. – Attention: extent to which a person devotes mental processing to a stimulus. – Interpretation: process of assigning meaning to a stimulus based on prior associations with it and assumptions he or she makes about it. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Motivation Motivation is an internal state that drives us to satisfy needs by activating goal-oriented behavior. Consumers purchase many products such as bathtubs for both functional and aesthetic reasons. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Maslow’s Hierarchy of Needs and Related Products Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Discussion Create an advertising slogan for a pair of jeans, which stresses one of the levels of Maslow’s hierarchy of needs. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Learning Learning is a relatively permanent change in behavior caused by information or experience. – Behavioral learning theories ▪ Classical conditioning ▪ Operant conditioning – Cognitive learning theory – Observational learning Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Consumers Learn in Many Ways Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Attitudes Attitudes represent lasting evaluations of a person, object, or issue. Three components of attitude: – Affect (feeling): emotional response – Cognition (knowing): beliefs or knowledge – Behavior (doing): intention to do something Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Personality: Are You What You Buy? Personality is the set of unique psychological characteristics that consistently influence the way a person responds to situations in the environment. – Self-concept – Self-esteem Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Age and Family Life Cycle What are some examples of products (e.g., diapers), services (e.g. various types of insurance), or experiences (e.g., family vacation to the Magic Kingdom) that would be suitable for consumers who are – Young singles? – Married with young children? – Empty nesters? Goods and services often appeal to individuals within a certain age group or to a stage in the Family Life Cycle. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Lifestyle Lifestyle reflects a pattern of living. Psychographics groups people according to psychological and behavioral similarities. – Often groups are developed based on their activities, interests, and opinions (A I O s) Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Figure 6.4 Influences on Consumer Decision Making Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Situational and Social Influences on Consumers’ Decisions Situational factors often shape purchase behaviors. – Sensory marketing/sensory branding – Physical environment and the purchase setting – Time poverty Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Social Influences on Consumer Decisions We are all individuals … – but we are also members of many groups that influence our purchasing behavior. Many social influences on consumer decision making, for instance: – Values (again) – Trends – Culture, subcultures, and microcultures – Conscientious consumerism – Social class – Reference groups and opinion leaders – Sex roles Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Culture Culture represents the shared values, beliefs, customs, and tastes produced or practiced by a group of people. – Includes rituals such as weddings and funerals – Marketers tailor products to cultural values Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Subcultures and Microcultures A subculture is a group that: – Coexists with other groups within a larger culture – Have members that share a distinctive set of beliefs, characteristics, or common experiences – For example, members of a religious or ethnic group Microcultures are groups of individuals who identify based on a common activity or art form, for instance: – The Voice or Grey’s Anatomy fans – Candy Crush players Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Social Class Social class is the overall rank or social standing of groups of people within a society, according to factors such as: – Family background – Occupation – Education – Income Luxury products serve as status symbols. Mass class Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Group Membership “Gone along with the crowd” Riskier alternatives Reference group What reference groups does a typical college student like you belong to? What influences does each have on the student? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Opinion Leaders Opinion leaders frequently influence the attitudes and behaviors of others. Such individuals typically share several characteristics: – High interest in a given product category – Update product category knowledge by reading, talking with salespeople, and so on. – Impart both positive and negative information – Are among the first to buy goods Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Gender Roles Gender roles relate to society’s expectations regarding appropriate attitudes, behaviors, and opportunities for men and women. – Consumers often associate sex-typed products with one gender or the other. – Sex roles are constantly evolving. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Part 2: Business-To-Business Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Buying and Selling When the Customer Is Another Organization Business-to-business (B2B) markets (also called organizational markets) include: – Manufacturers and other product producers – Resellers (retailers and wholesalers) – Government and not-for-profit institutions Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Business Marketplace Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Key Differences in Business Versus Consumer Markets Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Differences between Organizational and Consumer Markets (1 of 2) Organizational Markets Consumer Markets Purchases made for some purpose other than personal Purchases for individual or household consumption consumption Purchases made by someone other than the user of the The ultimate user often makes the purchase product Several people frequently make the decisions Individuals or small groups like couples and families usually decide Purchases made according to precise technical specifications Purchases often based on brand reputation or personal based on product expertise recommendations with little or no product expertise Purchases made after careful weighing of alternatives Purchases frequently made on impulse Purchases based on rational criteria Purchases based on emotional responses to products or promotions Purchasers often engage in lengthy decision processes Individual purchasers often make quick decisions Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Differences Between Organizational and Consumer Markets (2 of 2) Organizational Markets Consumer Markets Interdependencies between buyers and sellers; long-term Buyers engage in limited-term or one-time-only relationships with relationships many different sellers Purchases may involve competitive bidding, price negotiations, Most purchases made at “list price” with cash or credit cards and complex financial arrangements Products frequently purchased directly from producer Products usually purchased from someone other than producer of the product Purchases frequently involve high risk and high cost Most purchases are relatively low risk and low cost Limited number of large buyers Many individuals or household customers Buyers often geographically concentrated in certain areas Buyers generally dispersed throughout total population Products often complex; classified based on how organizational Products: consumer goods and services for individual use customers use them Demand derived from demand for other goods and services, Demand based on consumer needs and preferences, is generally inelastic in the short run, subject to fluctuations, and generally price elastic, steady over time, and independent of may be joined to their demand for other goods and services demand for other products Promotion emphasizes personal selling Promotion emphasizes advertising including online and social media Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Business-to-Business Demand (1 of 2) Business-to-business demand differs from consumer demand. Demand is: – Derived – Inelastic – Fluctuating – Joint Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Derived Demand Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall Figure 6.10 Derived Demand Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Business-to-Business Demand (2 of 2) Inelastic demand occurs when changes in price have little or no effect on quantity sought. Fluctuating demand is when small changes in consumer demand create large changes in business demand. – Life expectancy of the product can also create fluctuating demand. Joint demand occurs for two or more goods that are used together to create a product. What are some other examples of joint demand? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Elements of the Buyclass Framework Copyright © 2023 Pearson Education Ltd. All Rights Reserved.  Straight Rebuy Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall  Modified Rebuy Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall New Task Buy Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Professional Buyers and Buying Centers Trained professional buyers typically carry out buying in business organizations. – Procurement officers – Buying agents – Directors of Materials Management In many business buying situations, cross-functional teams of individuals— known as a buying center—work together to reach a decision. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Roles in the Buyer Center Role Potential Player Responsibility Initiator Production employees, sales Recognizes that a purchase needs to be managers, almost anyone made User Production employees, secretaries, Individual(s) who will ultimately use the almost anyone product Gatekeeper Buyers, purchasing agents Controls flow of information to others in the organization Influencer Engineers, quality control experts, Affects decision by giving advice and technical sharing expertise specialists, outside consultants Decider Purchasing agents, managers, CE Makes the final purchase decision Os Buyer Purchasing agents Executes the purchase decision Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Steps in the Business Buying Decision Process Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The End Copyright © 2023 Pearson Education Ltd. All Rights Reserved.