Marketing Mangement-2 Asst.Prof.

Manini H

Explain Business market and Consumer market

a.)Business market

Business market in simple words is business to business market where in the products or services
of a particular organization are sold to or purchased by other organization or business. It also
happens in support industries where the products that are manufactured are components required
to be assembled into the products or services offered by some other business organization.

b.) Consumer market

Consumer market refers to a market where in the seller sells the product for a primary reason of
making profits while buyer buys the products for personal use.

What are the major differences between the two?

1. In consumer market the purchase might even be made when the products are not required
in day to day activities. But in business market the business has to buy to stay profitable.
2. The business buyer is sophisticated in terms of the process involved in buying, decision
making while on the other hand the consumer in the consumer market might not be as
sophisticate.
3. The business buyer is an information-seeker, constantly on the lookout for information
and advice. On the other hand the consumer only searches information when he requires
to make a decision.
4. Packaging is important in consumer market while its non existent in the business market.
5. Expert advice is taken while making purchases in the business market as against the
consumer market.
6. Consumer market product are simplistic while business products are complicated.

BUYING ROLES

Definition
Buying roles refer to the activities that one or more person(s) might perform in a buying
decision. Six buying roles can be distinguished:
Initiator, the person who first suggests or thinks of the idea of buying the particular product or
service
Influencer, a person whose views influence other members of the buying center in making the
final decision
Decider, the person who ultimately determines any part of or the entire buying decision—
whether to buy, what to buy, how to buy, or where to buy
Buyer, the person who handles the paper work of the actual purchase
User, the person(s) who consumes or uses the product or service

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Gatekeeper, the person(s) who controls information or access, or both, to decision makers and
influencers (It also is used to indicate the individual who controls decision making by controlling
the purchase process. In a traditional family, the mother often functions as the gatekeeper
between the child and his/her exposure to the mass media and the purchase of toys or products.
In an organization, the purchasing agent is often the gatekeeper between the end user and the
vendor of products or services.)

STEPS INVOLVED IN BUYING PROCESS

1. Problem Identification:
This step is also known as recognizing of unmet need. The need is a source or force of buying
behaviour. Buying problem arises only when there is unmet need or problem is recognized. Need
or problem impels an individual to act or to buy the product.
Buyer senses a difference between his actual state (physical and mental) and a desired state. The
need can be triggered by internal or external stimuli. Internal stimuli include basic or normal
needs – hunger, thirst, sex, or comfort; while external stimuli include external forces, for
instance, when an individual watch a new brand car, he desires to buy it.

2. Information Search:
Interested consumer will try to seek information. Now, he will read newspapers and magazines,
watch television, visit showroom or dealer, contact salesman, discuss with friends and relatives,
and try all the possible sources of information.

Mostly, the consumer can try one or more of following sources of information:

 Personal Sources:
They may include family members, friends, package, colleagues, and relatives.
 Commercial Sources:
Advertising, salesmen, dealers, package, trade show, display, and exhibition are dominant
commercial sources.
 Public Sources:
Mass media (radio, TV, newspapers, magazines, cinema, etc.), consumer- rating
agencies, etc., are main public sources.
 Experimental Sources:
They include handling, examining, testing, or using the product.

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3. Evaluation of Alternatives:
In the former stage, the consumer has collected information about certain brands. Now, he
undergoes evaluation of brands. He cannot buy all of them. Normally, he selects the best one, the
brand that offers maximum satisfaction. Here, he evaluates competitive brands to judge which
one is the best, the most attractive. Evaluation calls for evaluating various alternatives with
certain choice criteria.

Following criteria are considered while evaluating alternatives:

 Benefits offered by the brands.

 Qualities, features or attributes, and performance
 Price changed by various brands
 History of brands
 Popularity, image or reputation of brands
 Product-related services offered by the brands, such as after-sales services, warrantee,
and free installation
 Availability of brands and dealer rating.

4. Purchase Decision:
This is the stage when the consumer prefers one, the most promising band, out of several brands.
The former stage helps consumers evaluate various brands in the choice set. The brand that
offers maximum benefits or satisfaction is preferred.
Sub-decisions in Purchase Decision:
Consumer’s buying decision involves following five sub-decisions:

 Brand Decision:For example, CBZ (model) motorbike of Hero Honda.

 Vender Decision:For example, XYZ Hero Honda Showroom.

 Quantity Decision:For example, one motorbike.

 Timing Decision:For example, on 1st December, 2007.

 Payment Decision:For example, by cash.

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5. Post-purchase Decisions:
Consumer buys the product with certain expectations. Though he decides very systematically,
there is no guarantee of a complete satisfaction. There is always possibility of variation between
the expected level of satisfaction and the actual satisfaction. His subsequent behaviour is
influenced by degree of satisfaction/dissatisfaction.

Marketer must monitor the post-purchase experience of the buyers that includes:

a. Post-purchase Satisfaction

b. Post-purchase Action

c. Post-purchase Use and Disposal

a.Post-purchase Satisfaction:
Actual satisfaction may not be equal to the expected one. He may find some problems or defects
in the product while using. It is the matter of interest for marketer to know whether consumer is
highly satisfied, somewhat satisfied, or dissatisfied. Consumer’s satisfaction is the function of
the relationship between expected/perceived performance (expectations) and actual performance.
b.Post-purchase Action:
Obviously, level of the consumer’s satisfaction with the product affects his subsequent
behaviour/action. If he is satisfied reasonably, he purchases the product again, and talks
favourably to family members, friends, relatives, and co-workers.

Dissatisfaction can be reduced by:

1. Congratulating consumers for the right choice to justify their decision

2. Sending booklet to guide for effective use of the product

3. Inviting suggestions from consumers

4. Managing complaints by effective counseling and after-sales services

5. Informing about changes made in the product

6. Exchanging or returning amount, etc.

c.Post-purchase Use and Disposal:

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Marketer should also monitor how the consumers use and dispose the product. Such information
can be a very good guideline for the marketer. Marketer can learn possible problems and
opportunities relating with the product.

In normal situation, the consumer uses or disposes the product in followings ways:

1. He may not use the product immediately; store it for the future use.

2. Use the product fully immediately after purchase.

3. Resell or trade it.

4. Use the product differently than it is meant for. He may find new uses of the product.

5. Offer the product to others as a gift.

6. Throw the product away, considering as useless.

FACTORS INFLUENCING BUYING DECISIONS

1. Economic Factors
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2. Personal Factors
3. Cultural Factors
4. Psychological Factors
5. Social Factors

1.Economic Factors
Economic factor directly affects consumers behavior. Buying decision and willingness to spend
depend on the purchasing power. Similarly, purchasing power and willingness to buy depend on
the economic condition depends on the income of the other members of the family expectation of
income in future, availability of liquid asset, credit facility etc. So, purchasing power and
willingness of customers are the main economic forces that affect individual buying decisions.

Personal income:
When the income of the consumer increases the buying capacity of the consumer also increases.
In such stage, the consumer will give priority to the luxurious goods and services. But if the
income of the consumer is lower than the consumer will give priority to the physical needs than
the luxurious goods.

Family income:
The buying capacity of the consumer is influenced by the family size and family income.
Because in a joint family, the rise in individual member's income influences the family income.
Therefore, the relationship between the family size or the requirements and the income
determines the buying behavior of the family members.

Expected future income:

The future expectations of the consumer also influence the consumer behavior. If the consumer
is expecting week future income then the consumer will spend less income and saves more. In
this case. the consumer will prefer to choose physical needs than the luxurious goods.

Price level:
Market price also affects the individual buying decision. If the market price of a particular goods
and service increases then the customers will stop buying that goods and services. Similarly,
when the price of that goods decreases the customers will take immediate buying decision.

National Income:
The national income affects the buying behaviors of the consumers directly or indirectly. For
example, the people having high income will pay higher tax to the nation then the income will be
spent to the wellbeing of the lower class by the nation. This will have positive effect on buying
decision.

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2.Personal Factors
Personal characteristics like age, sex, race, ethnicity, income, family, occupation etc are included
in demographic determinants. Personal factors affect the person involved in family decision-
making process age and income of a person may affect number and type of information, sources,
and time used in a collection of information. It may even affect the type of specific goods used
by any person.

Age :
A buyer's age also affects the buying decision. The choice and need of goods and services
change according to the age of the buyer. Teenage, youths select the fashionable products,
children select toys whereas older customers give importance to quality, durability, and discount
on goods and services.

Lifestyle:
People from same sub-culture, social class, and occupation may have a quite different lifestyle.
According to their lifestyle, the choice is also different. So, this affects the behavior of the
consumer.

Occupation:
Occupation influences to a great extent on buying decisions. The occupation of a consumer
determines the nature of the products and service demanded by the consumers. For example, the
doctor needs medical equipment, engineers need drawing equipment, and students want books.

Family size and family lifecycle:

The size of the family determines the consumption of the products. A large family has heavy
consumption of products than a small family. The consumer's products vary according to the
stage of their family life cycle. The consumption of a single bachelor is less than a family.

3.Cultural Factors
A consumer's buying behavior is also influenced by various cultural factors.

a.Culture:
Culture is a set of basic values, perceptions, wants and behaviors learned by a member of
society from family and other institutions. All these values change the buying attitudes of
consumers. Culture is transmitted to the future generation. Culture changes with time. So, the
marketer has to adjust to the differences in order to get better results in marketing.

b.Sub-culture:
The sub-culture is the sub-division of national culture based on some homogeneous
characteristics such as language, ethnicity, race, region etc. The sub-cultures influence greatly on
the consumer preferences and their behavior.
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4.Social Factors
A consumer's buying behavior is also influenced by various social groups and social class.

Family:
The family members influence the purchase decision. The members of the family play the role of
initiator, influencer, decider, purchaser and user in the buying process. Therefore, the type of role
assumed by a family member and the purchase decision varies across families, situations, and
product.

Reference groups:
Reference groups are any person or group that serves as a point of comparison or reference for
an individual in the formation of either general or specific values, attitudes or behavior. Influence
of reference group on consumer buying decision depends on the nature of the person, type of
product and other social factors.

Opinion Leaders:
Opinion leaders play a key role in influencing the buying behavior of their followers. The
opinion leader sets a trend and pattern for others to follow in given situation. So, the products
used by the leader is also used by all the entire group of followers behind them.

Social class and caste class:

Buying behavior of an individual is also influenced by the social class and the caste to which
they belong. Social class is relatively permanent and homogeneous division of a society. Caste is
the group of membership by birth. The variations in class and caste result in differences in choice
of stores, choice of products and brands and frequency of buying.

5.Psychological Factors
Psychological factors like motivation, perception, learning , beliefs, and attitudes influence the
consumer behavior considerably. Psychological factor within the individual determines their
consumption behavior.

Perception:
The action of a person is influenced by his/her perception of the situation. Different people
perceive the same situation with the same motivation differently. This different perception
happens because of three perceptual processes i.e. selective attention, selective distortion, and
selective retention.
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Learning:
Learning is the change in behavior of person arising from experience. It is the change in the
behavior which occurs as a result of practice. The mind of a person thinks and decides based on
the past experience and the body acts accordingly.

Beliefs:
Belief is the conception built up by the individuals about any goods, services, brand, person,
company or organization. Generally, everyone makes their buying decisions according to their
belief. So, their behavior is mostly affected by their belief

Attitude:
Attitude is a state of mind or feeling and it interacts with perception, thinking, feeling and
reasoning. Knowledge of consumers attitudes provides an idea for improvement of strategies of
the business firm. It is defined as " a learned predisposition to respond in a consistently favorable
or unfavorable manner to a stimulus."

Motivation:
Motivation refers to an activated state within a person that leads to goal-directed behavior.
According to Abraham Maslow, the first theory of motivation is based on needs.
According to him, the needs are arranged in a hierarchy, from the most pressing to the least
pressing. He has listed five categories of needs. These are discussed below:

Physiological needs are the basic needs for survival and include the need for food, drink, shelter,
sleep and sex. These needs relate the survival; and maintenance of human life.

Safety needs include the need for physical, economic and social security. Everyone wants job
security, protection against dangers, the safety of property etc.

Social needs include the need for affection, relations between individuals, and a place in the
family and society.

Esteem needs are associated with a desire to achieve high status among one's peers and includes
the need for mastery, reputation, prestige and high social image.

Self-actualization is the desire to achieve the highest point of one's capabilities and includes a
desire to travel, known and understand.

CONSUMER ADOPTION PROCESS (5 STAGES)

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Philip Kotler considers five steps in consumer adoption process, such as awareness, interest,
evaluation, trial, and adoption. On the other hand, William Stanton considers six steps, such as
awareness stage, interest and information stage, evaluation stage, trial stage, adoption stage, and
post-adoption stage. We will follow six steps.

1. Awareness Stage:
Individual consumer becomes aware of the innovation. He is exposed to innovation but knows
very little regarding the innovation. He has only limited information about it. He is aware of
either by discussion with friends, relatives, salesmen, or dealers. He gets idea about a new
product from various means of advertising like newspapers, magazines, Internet, television,
outdoor media, etc. At this stage, he doesn’t give much attention to the new product.

2. Interest and Information Stage:

In this stage, the consumer becomes interested in innovation and tries to collect more
information. He collects information from advertising media, salesmen, dealers, current users, or
directly from company. He tries to know about qualities, features, functions, risk, producers,
brand, colour, shape, price, incentives, availability, services, and other relevant aspects. Simply,
he collects as much information as he can.

3. Evaluation Stage:
Now, accumulated information is used to evaluate the innovation. The consumer considers all
the significant aspects to judge the worth of innovation. He compares different aspects of
innovation like qualities, features, performance, price, after-sales services, etc., with the existing
products to arrive at the decision whether the innovation should be tried out.

4. Trial Stage:
Consumer is ready to try or test the new product. He practically examines it. He tries out the
innovation in a small scale to get self-experience. He can buy the product, or can use free
samples. This is an important stage as it determines whether to buy it.

5. Adoption Stage:
If trial produces satisfactory results, finally the consumer decides to adopt/buy the innovation.
He decides on quantity, type, model, dealer, payment, and other issues. He purchases the product
and consumes individually or jointly with other members.

6. Post Adoption Behaviour Stage:

This is the last stage of consumer adoption. If a consumer satisfies with a new product and
related services, he continues buying it frequently, and vice-versa. He becomes a regular user of
innovation and also talks favourable to others. This is a crucial step for a marketer.

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In every stage of consumer adoption, a marketer is required to facilitate consumers. He must take
all possible actions to make them try, buy, and repeat buy the innovation. Be clear that every
type of consumer (innovators, early adopters, early majority, late majority, or laggards) follows
all the stages of adoption process, but takes different amount of time to adopt the innovation.

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