MARKET OPPORTUNITY ANALYSIS AND CONSUMER ANALYSIS

Strategic marketing vs. Tactical marketing

Strategy – A plan for reaching a specific goal
In business: broad goal
Planning – Future events, best way

Strategic planning is a management process of creating and maintaining a fit between the objectives and resources of
the organization and the changing marketing opportunities
Goal: Long term profitability and growth of the company.

Strategy – The thinking process in planning

Tactics – Specific actions

Tactical planning is the short-range planning that emphasizes the current operations of various parts in the organization.

Strategic planning process

Mission
Situational (SWOT) Analysis
Objectives
Strategy
Overall cost leadership – Low price
Differentiation – Superior performance, but not leading in all
Focus – focuses on one segment
Evaluation

Internal environment
Direct impact
Employees
Board of Directors
Managers

External environment
Indirect but significant
And not be controlled by the firm
Microenvironment
Specific business environment / operating / task
environment
Customers
Suppliers
Pressure groups
Investors
Macroenvironment
General
Economic
Social cultural
Politicolegal
Demographic
World and ecological
Technological
Components of the external business environment:
GENERAL
Includes all the economic, social cultural, political legal, demographic, technological, and world ecological situations.

Political situations
Local, national, international laws
rules and regulations that influence organizational management

Economic situations
Inflation
Rates of interest
Changing options in stock markets
People’s spending habits

Social cultural situations

Customers changing values and preferences
Customs

Technological situations
electronic gadgets
Advanced technology (computers, robotics, microprocessors)
E-commerce, teleconferencing

Legal situations
Labor laws
Taxation laws

Ecological or environmental situations

Increasing number of global competitors and market
Nature and condition of the natural changing environment

SPECIFIC
Stakeholders - parties likely to be affected by the activities of the organization.
Customers - those who patronize the organization’s products and services
Suppliers - inputs are materials; includes labor and financial supply
Pressure groups - special interest groups that try to exert influence on the organization’s decisions or actions
Investors or owners - provide the company with the financial support it needs
Employees - those who work in exchange of salaries/wages or any other considerations.

ENVIRONMENTAL SCANNING
The actual monitoring and evaluation of information from the external and internal environment of a business
organization
Information is then provided to key people to guide the organization in its business operations and in preparing for
target market operations
Modes:
Ad hoc - is an unplanned or unscheduled event. The name comes from the Latin phrase meaning “for this purpose only.”
Regular -
Continuous

COMPONENTS
Developing a competitive mindset
knowing present day competitors
Possible number of barriers
Existence or nonexistence of substitutes
Possible dependence on suppliers and customers
Considering future business scenarios
Worst case/ middle ground/ best case scenario
Business prediction
Business forecasting
Predicts how variables may alter the future of business
accuracy is not always assured
Benchmarking
The process of measuring or comparing one's own products, services, and practices with those of the recognized
industry leaders in o to identify areas for improvement.

Strategic planning
SWOT
Microenvironment
Strengths, weaknesses (internal)
Opportunities, Threats (External)

STRENGTHS
Brand equity
Product portfolio performance
Strong distribution
Tie-ups
Clear target audience

WEAKNESSES
Products perceived as unhealthy
Product dependence
Failed products
Brand ambassadors
Value addition

OPPORTUNITIES
healthy options
Diversification next slide
CSR
R&D
Flavors

THREATS
Competitors
health factor
economic slowdown
government norms

POLITICAL
Soda taxes are killer
In 2017 both companies grappled over a new American tax called the soda tax.
Pepsi spent over $2.3 million on lobbying.

ECONOMIC
Inflation, economic stability, and taxes affect PepsiCo.
Foreign exchange rate
SOCIAL
Fluctuations in lifestyles, money spending, and buying behavior
TECHNOLOGICAL
Online advertisements, social media, and video marketing (YouTube).

MARKETING NOTES

Marketing Research
• Systematic process that collects data about the marketing problem, records this data, analyzes this
data and draws conclusions from it, and give suggestions for solving the marketing problem.

Features
• Wide and comprehensive scope – includes product research, packaging research, pricing, market,
sales research and so on. Used to solve marketing problems and to make marketing decisions. Used to
make marketing policies and introduce new products in the market and identify new markets.

Marketing research is also used to select channels of distribution in advertising strategy for sales
promotion measures.

• Systematic and scientific – research marketing is conducted in a step by step manner. It is conducted in
an orderly fashion. Marketing research uses scientific methods.

• Science and art – as a science it collects knowledge/data, while as an art it uses this knowledge for
solving problems.

• Collects and analyzes data – marketing research gathers data accurately and objectively. It first collects
reliable data and then analyzes it systematically and critically

• Continuous and dynamic process – marketing research is conducted continuously, it continuously

collects up-to-date data for solving the marketing problems. Large companies have their own marketing
research departments. As a dynamic process it keeps on changing, it does not remain static, it uses
new methods and techniques for collecting, recording and analyzing data.

• Tool for decision-making – marketing research provides correct and up to date data to the marketing
manager. Helps them to make quick and correct decisions

• Benefits Company and consumers – increases the sales and the profits of the company, helps the
company to fight competition and boost its goodwill in the market. It reduces marketing risks. In short,
marketing research brings success to the company. Also brings the company closer to the consumers,
gives convenience and satisfaction to the consumers.

More features

• Similar to military intelligence

- Marketing intelligence makes a systematic study and takes business actions
- collects reliable data about the consumers and competitors
- data is organized and used for planning, decision-making and problem solving
- use for introducing new products and services

• Applied research
- used for solving problems
- marketing research has a practical value

• Connected with MIS (Marketing Information System)

- both are used to solve marketing problems and to take marketing decicions
 - marketing research and mis are interrelated

• Reduces gap
- marketing research informs producers about the needs and wants of the consumers, producers will
produce goods according to needs and demands of the consumers. Brings satisfaction to consumers
and producers make good profits.

• Different methods
Uses three methods: survey, experiment and observation method all 3 methods are scientific

• Few limitations
- marketing research is not an exact science (does not give 100% accurate results
- could still provide suggestions
- It can be costly and a time consuming process

• Accurate data collection and critical analysis

- marketing research gives much importance to accurate data collection and its critical analysis
- the data must be collected accurately, gathered information must be accurate, reliable, and relevant.

IMPORTANCE of Marketing Research

• Provides valuable data – provides data about demand, supply, consumer behavior, and competition
among others. Uses the data for decision making, which improves quality of decisions and very
successful.

• Studies consumer behavior – provides data about the demographic (age, gender, income, like and
dislikes etc). Finds out about the opinions of the consumers about a company’s product. Use to make
production and marketing policies.

• Selects promotional techniques – helps how to promote or what promotional techniques to use. Also
helps them to select the proper media for advertising, helps them solve the problems of after sales
service, helps them prepare the budget for advertising and sales promotion

• Supplies marketing information – this market related data is used to find out (a) the present and future
demand and supply position (b) the level of competition and what are the stakes taken to control it (c)
market opportunities and (d) the cost of fall in sales level

• Evaluates marketing performances – use to finds out the effect of price, package, brand name, and etc.
on sales. Used to find consumers reaction towards company’s product. Use to evaluate the inventory
and pricing policies. Use to evaluate the effectiveness of advertising, sales promotion techniques,
channels of distribution among others

• Miscellaneous
o Efficiency, decision-making, staff, expansion programs, benefits society

Steps in conducting a marketing research

1. Formulating the marketing research problem – starts with the problem that a management is facing.
- a management problem must be translated into a research problem

• Management problems – focus on action

• Research problems – focus on providing the information needed in order to solve the
management problem

2. Statement of research objectives – may be stated in a qualitative or quantitative term and expressed as
research questions statement or hypothesis.
 (Research design will depend on your research objectives/questions)

3. Research design – is a plan or framework for conducting the study and collecting data, defined as the
specific methods and procedures used to acquire the information needed. Represents a framework for
the research plan of action.

Objectives of the study are included in the research design to ensure that data are collected are relevant
to the objectives.

Researchers should determine the type of sources of information needed: the data collection method,
the sampling, methodology and the timing and possible costs of research.
a) Exploratory (research) – when the marketer has little or no understanding about the research problem
due to lack of proper information.
- gain or discover insights about the situation. The goal of the marketer is to precisely formulate
problems, clear concepts, gain insights, eliminate impractical ideas and form hypothesis then
exploratory research is used

Exploratory research follows a structured (?) format and makes use of qualitative techniques,
secondary research and experts’ opinions.

b) Descriptive (research) – describes marketing problems, situations or markets. Use to find accurate
answers of questions (like: who are the users of my products? How they are using my products?
What proportion of the population uses my products? What are the future demands for my products?
Who are all my competitors?)

Used to explain, monitor and test hypothesis created by marketers to help them find accurate
answers. Rigid, well-structured and well planned (uses quantitative techniques)

c) Causal (research) – aim to find the cause and effect relationship of variables. Sometimes referred to
as “if then method”. A researcher tries to understand the effects manipulating independent variable
on other dependent variable. This research uses field and laboratory experimentation techniques.

To predict and test hypothesis

4. Planning the sample

• Probability method:
- Simple random (refers any sampling method that has the following properties – the population
consists the N objects the sample consists of n objects)

- Stratified (the population is divided into groups based on characteristic; within each group a
probability sample often simple sample is selected. In stratified the groups are called “strata”.)

- Cluster (every member of the population is assigned to one and only one group, each group is
a cluster. Only individuals within the sample clusters are surveyed)

- Multistage (a sample is selected by using combinations of different sampling methods)

- Systematic random (the researcher creates a list of every member of the population from the list
he randomly selects the first sample element from the first K elements on the population list.

• Non-probability method:
- Voluntary (is made up of people who self-select into the survey)
- Convenience (made up of people who are easy to reach)
 The final stage of the sample design involves determining the appropriate sample size this step
involves cost and accuracy decisions. Larger samples reduce sampling error and increased
accuracy but increased the costs.

5. Data collection – relates to the gathering of facts to be used in solving the problems.
• Kinds of data:
- Secondary (are facts and figures that have already been recorded before the marketing research
or project – it could be collected from reports magazines and other periodicals) (two sources:
internal source – include the data that exist and is stored inside the organization, external source
– collected by other people or organizations from the organization’s external environment
- Primary (Facts and figures that are newly collected from the marketing research project. Data
that are primary can be collected from the original base through empirical research)

• Methods:
- Interviews (required asking questions and receiving responses)

This broad category of research technique is known as survey research

These techniques are used in both non-experimental and experimental research.

- Observation (observing a person’s or a company’s past or present behavior can predict future
purchasing decisions)

6. Analysis and interpretation – Vary and their effectiveness depend on the type of information collected
and the type of measurements used. They are dependent on data collection analysis techniques should
be decided before you go to step 6.

7. The marketing research report – the report should include all information including the accurate
description of the research process, the results, conclusions, and recommendations. The report should
provide all the information the decision maker needs to understand the project. Need to be clearly
understood, keep it short and simple.

Balance between being complete and being concise. You don’t want to put in too much information esp.
technical information.

WHAT IS CONSUMER BEHAVIOR?

Consumer behavior is the study of how people make decisions about what they buy, want, need or act in regards to a
product, service, or company. It is critical to understand consumer behavior to know how potential customers will
respond to a new product or service. It also helps companies identify opportunities that are not currently met.
Understanding consumer behavior allowed the pro-active companies to increase their market share by anticipating the
shift in consumer wants. To fully understand how consumer behavior affects marketing, it's v to understand the three
factors that affect consumer behavior: psychological personal, and social.

Psychological Factors
In daily life, consumers are being affected by many issues that are unique to their thought process. Psychological factors
can include perception of a need or situation, the person's ability to learn or understand information, and an individual's
attitude. Each person will respond to a marketing message based on their perceptions and attitudes. Therefore,
marketers must take these psychologic factors into account when creating campaigns, ensuring that their campaign will
appeal to their target audience.

Personal Factors
Personal factors are characteristics that are specific to a persona and may no relate to other people within the same
group. These characteristics may include how a person makes decisions, their unique habits and interests, and opinions
When considering personal factors, decisions are also influenced by age, gender, background, culture, and other
personal issues. For example, an older person will likely exhibit different consumer behaviors than a younger person,
meaning they will choose products differently and spent their money on items that may not interest a younger
generation.

Social Factors
The third factor that has a significant impact on consumer behavior is social characteristics, Social influencers are quite
diverse and can include a person's family, social interaction, work or school communities, or any group of people a
person affiliates with. It can also include a person's social class, which involves income, living conditions, and education
level. The social factors are very divers and can be difficult to analyze when developing marketing plans. However, its
critical to consider the social factors in consumer behavior, as they greatly influence how people respond to marketing
messages and make purchasing decisions Fr example, how using famous celebrities can influence buyers.

DESCRIBE CONSUMER MARKET

The consumer market pertains to buyers who purchase goods and services for consumption rather than resale.
However, not all consumers are alike in their tastes preferences and buying habits due to different characteristics that
can distinguish certain consumers from others. These particular consumer characteristics include various demographic,
psychographic, behavioral and geographic traits. Marketers usually define these consumer characteristics through
market segmentation, the process of separating and identifying key customer groups.

Demographic Characteristics

Characteristics of consumer markets based on demographics include differences in gender, age, ethnic background,
income, occupation, education, household size, religion, generation, nationality and even social class. Most of these
demographic categories are further defined by a certain range. For example, companies may identify the age of their
consumers in the 18 to 24, 25 to 34, 35 to 54, 55 to 65, and 65+ age groups. Companies often identify these
demographic characteristics through market research surveys used to discover which demographic groups comprise the
majority of their customer base. Companies can then target there may be targeted toward 18 to 24-year-olds with
incomes between Php 15,000 and Php 25,000.

Psychographic Characteristics

Consumer market characteristics can also be psychographic in nature. Psychographic characteristics of consumers
include interests, activities, opinions, values and attitudes. Once the psychographics are compiled, a personality profile
emerges. For example, a psychographic may reflect a socially conscious consumer who strives to support nonprofits
through his purchasing habits and tends to participate in environmentally friendly activities. Obviously, many magazines
are geared toward a consumer's interest. Opinions and attitudes can be either specific or general. A company may
better understand consumer opinions and attitudes after conducting a focus group, and can use that information to
tailor advertising or marketing campaigns. Consumer values can pertain to how a group of individuals feels about certain
social issues, which can be of interest to nonprofit or charitable organizations.

The major tendencies of these groups are:

1. Actualizers -Successful, sophisticated, active, "take-charge" people whose purchases often reflect cultivated tastes for
relatively upscale, niche- oriented products.

2. Fulfilleds -Mature, satisfied, comfortable, and reflective people who favor durability, functionality, and value in
products.

3. Achievers - Successful, career- and work-oriented consumers who favor established, prestige products that
demonstrate success.

4. Experiencers - Young, vital, enthusiastic, impulsive, and rebellious people who spend much of their income on
clothing, fast food, music, movies, and video.
5. Believers -Conservative, conventional, and traditional people who favor familiar products and established brands.

6. Strivers Uncertain, insecure, approval -seeking, resource constrained consumers who favor stylish products that
emulate the purchases of wealthier people.

7. Makers -Practical, self-sufficient, traditional, and family-oriented people who favor products with a practical or
functional purpose, such as tools and fishing equipment.

8. Strugglers -Elderly, resigned, passive, concerned, and resource-constrained consumers who are cautious and loyal to
favorite brands.

Behavioral Characteristics

Behavioral characteristics can also be garnered through marketing research Behavioral characteristics of consumer
markets include product usage rates, brand loyalty, user status or how long they have been a customer, and even
benefits that consumers seek. Companies like to know how often their consumers visit their restaurants, stores or use
their products. Company marketing departments usually try to distinguish between heavy, medium and light users,
whom they can then target with advertising. Marketers like to know which customers are brand loyalists, as those
consumers usually only buy the company's brand.

Geographic Characteristics

Consumer markets also have different geographic characteristics. These geographic characteristics are often based on
market size, region, population density and even climate. There are several ways that a market can be geographically
segmented. The company can divide your market by geographical areas, such as by city, county, state, region, (like the
West Coast), country, or international region. (like Asia). It can also divide the market into rural, suburban, and urban
market segments. And, the firm can segment a market by climate or total population in each area. A small retailer may
find opportunities in a small market in which larger competitors have no interest. Companies that sell beachwear will
likely sell more products in warmer climates. Consumers in different regions of the country a have different tastes in
food and style.

CONSUMER PURCHASE DECISION PROCESS

In order to successfully reach their target market, marketers must have some idea of how much time and effort
consumers will put into a purchase decision. Here are the steps in consumer purchase decision.

Problem recognition

The need recognition is the first and most important step in the buying process. If there is no need, there is no purchase.
This recognition happens when there is a lag between the consumer's actual situation and the ideal and desired one.

However, not all the needs end up as a buying behavior. It requires that the lag between the two situations is quite
important. But the "way" (like product price, ease of acquisition) to obtain this ideal situation has to be perceived as
acceptable by the consumer based on the level of importance he attributes to the need.

In addition to a need resulting from a new element, the gap between the actual situation and the ideal situation may be
due to three cases. The current situation has not changed, but the ideal situation has. Or, the ideal situation is still the
same but it's the actual situation has changed. Or finally, the two situations have changed. The recognition of a need by
a consumer can be caused in different ways. Different classifications are used:
1. Internal stimuli (physiological need felt by the individual as hunger or thirst) which opposes the external stimuli such
as exposure to an advertisement, the sight of a pretty dress in a shop window or the mouth-watering smell of a
chocolate cake when passing by
2. Classification by type of needs:

a. Functional need - the need is related to a feature or specific functions of the product or happens to be the answer
to a functional problem. Like a computer with a more powerful video card to be able to play the latest video games or a
washing machine that responds to the need to have clean clothes while avoiding having to do it by hand or go to the
laundry station.

b. Social need - the need comes from a desire for integration and belongingness in the social environment or for social
recognition. Like buying a new fashionable bag to look good at school or choose a luxury car to show success in life.

c. Need for change -the need has its origin in a desire from the consumer to change. This may result in the purchase of a
new coat or new furniture to change the decoration of one's apartment.

3. The Maslow's hierarchy of needs - Developed by the eponymous psychologist, this is one the best known and widely
used classifications and representations for hierarchy of needs. It specifies that an individual is guided by certain needs
that he wants to achieve before seeking to focus on the following ones:

Information search

Once the need is identified, it's time for the consumer to seek information about possible solutions to the problem. He
will search more or less information depending on the complexity of the choices to be made but also his level of
involvement. (Buying pasta requires little information and involves fewer consumers than buying a car.)

Then the consumer will seek to make his opinion to guide his choice and his decision-making process with:

1. Internal information - This information is already present in the consumer's memory. It comes from previous
experiences he had with a product or brand and the opinion he may have of the brand. Internal information is sufficient
for the purchasing of everyday products that the consumer knows - including Fast-Moving Consumer Goods (FMCG) or
Consumer Packaged Goods (CPG). But when it comes to a major purchase with a level of uncertainty or stronger
involvement and the consumer does not have enough information, he must turns to other sources of information.

2. External information - This is information on a product or brand received from and obtained by friends or family, by
reviews from other consumers or from the press. Not to mention, of course, official business sources such as an
advertising or a seller's speech. During his decision-making process and his consumer buying decision process, the
consumer will pay more attention to his internal information and the information from friends, family or other
consumers. It will be judged more objective than these from advertising, a seller's speech or a commercial brochure of
the product.

Alternative evaluation

Once the information collected, the consumer will be able to evaluate the different alternatives that offer to him,
evaluate the most suitable to his needs and choose the one he thinks it's best for him.

In order to do so, he will evaluate their attributes on two aspects.

1. objective characteristics - such as the features and functionality of the product

2. subjective characteristics - such as perception and perceived value of the brand by the consumer or its reputation

Each consumer does not attribute the same importance to each attribute for his decision and his consumer buying
decision process. And it varies from one shopper to another. Mrs. Serrano may prefer a product for the reputation of the
brand X rather than a little more powerful but less known product. While Mrs. Camilar has a very bad perception of that
same brand.

The consumer will then use the information previously collected and his perception or image of a brand to establish a
set of evaluation criteria, desirable or wanted features, classify the different products available and evaluate which has
the most chance to satisfy him.

The process will then lead to what is called evoked set. The evoked set is the set of brands or products with a probability
of being purchased by the consumer. This is because the consumer has a good image of it or the information collected i
positive.

On the other hand, inept set is the set of brands or products that have no chance of being purchased by the shopper.
This is because the consumer has a negative perception or has had a negative buying experience with the product in the
past While inert set is the set of brands or products for which the consumer has no specific opinion.

The higher the level of involvement of the consumer and the importance of the purchase are stronger, the higher the
number of solutions the consumer will consider will be important. On the opposite, the number of considered solutions
will be much smaller for an everyday product or a regular purchase.

Purchase decision

Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be
able to choose the product or brand that seems most appropriate to his needs. Then proceed to the actual purchase
itself.

His decision will depend on the information and the selection made in the previous step based on the perceived value,
product's features and capabilities that are important to him.

But his consumer buying decision process and his decision process may a depend or be affected by such things as the of
his shopping experience or also of the store for online shopping website), the availability of a promotion, a retum policy
or good terms and conditions for the sale.

For example, a consumer committed to the idea of buying a stereo of a well- known brand could change his decision if he
has an unpleasant experience with sellers in the store. While a promotion in a supermarket for a yogurt brand could tip
the scale for this brand in the consumer's mind who was hesitating between three brands of his evoked set.

Post-purchase behavior

Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs or whether he
has made the right choice in buying this product or not. He will feel either a sense of satisfaction for the product. On the
contrary, he will feel disappointed if the product has fallen far short of expectations.

DESCRIBE BUSINESS MARKET

The business market comprises all the organizations that buy goods and service for use in the production of other
products and services that are sold, rented, or supplied to others. It also includes retailing and wholesaling firms that
acquire goods for the purpose of reselling or renting them to others at a profit. In the business buying process business
buyers determine which products and services their organizations need to purchase, and then find, evaluate, and choose
among alternative suppliers and brands, Companies that sell to other business organizations must do their best to
understand business markets and business buyer behavior.

Intermediaries
Companies that sell to both consumers and other businesses may market their products through intermediaries, such as
retailers, wholesalers or distributors. To build business through these channels, companies operate a marketing program
focused on intermediaries. They must encourage intermediaries to stock products through incentive programs and
support them with marketing collateral their such as advertisement templates or point-of-sale display material.

Services Market

Companies that offer services also market them to consumers, other businesses and government agencies. However,
marketing services requires different skills and strategies and therefore represents a different business market.
Companies offer consumers services, such as plumbing, hairdressing or landscaping. They may also provide professional
services, such as management consultancy, accountancy or property maintenance, to other businesses or government
agencies.

Industrial Businesses

Companies that sell products to other businesses operate in the business to-business market, or B2B. They may sell
materials or components that other companies use to manufacture their own products, or they might sell finished
goods, such as office equipment or machine tools. Companies market their products through a sales team or via
intermediaries, such as distributors. Although a purchasing manager is responsible for making the final buying decision,
other employees, such as technical managers, manufacturing managers or finance directors, may influence the choice of
product and supplier.

Institutional Markets

The institutional market consists of schools, hospitals, nursing homes prisons and other institutions that provide goods
and services to people in their care. Institutions differ from one another in their sponsors and activities. Many
institutional markets are characterized by low budget and captive patrons. For instance hospital patients have little
choice but to eat whatever food the hospital supplies. A hospital purchasing staff has to decide on the quality of food to
buy for patients. Because the food is provided as a part of the total service package the buying objective is not for profit.
Nor is strict cost minimization the goal because patients receiving poor quality food will complain to others and damage
hospital's reputation. Thus, the hospital purchasing staff must search for institutional food vendor whose quality meets
or exceeds a certain minimum standard and whose prices are low. Many marketers set up separate divisions to meet the
special characteristics and needs of institutional buyers.

Government Markets

The government market offers big opportunities for small and big companies In most countries, government
organizations are major buyers of goods a services. Companies who wish to sell products and services to governments
must know the similarities and differences of government buying and business buying. In order to succeed in the
government market, sellers need to locate key decision makers, identify the factors affect buyer behavior and
understand the buying decision process.

Government organizations require suppliers to submit bids and the contract is awarded to the supplier with the lowest
bid. Government buying has emphasized price, making suppliers invest their effort in technology to bring costs down.

TYPES OF BUSINESS PURCHASE DECISIONS

Not all buying situations are first-time occurrences. There are actually three types of buying situations that can occur:

1. Straight Rebuy - These purchase situations involve routine ordering. In most cases buyers simply reorder the same
products or services that were purchased. In fact, many larger companies have programmed re-purchases into an
automated ordering system that initiates electronic orders when inventory falls below a certain pre-determined level.
For the supplier benefiting from the re-purchase this situation is ideal since the purchaser is not looking to evaluate
other products. For competitors who are not getting the order it may require extensive marketing efforts to persuade
the buyer to consider other product or service options.

2. Modified Rebuy - These purchases occur when products or services previously considered a straight re-purchase are
for some reason now under a re-evaluation process. There are many reasons why a product is moved to the status of a
modified re-purchase. Some of these reasons include: end of purchase contract period, change in who is involved in
making the purchase, supplier is removed from an approved suppliers list, mandate from top level of organization to re-
evaluate all purchasing, or strong marketing effort by competitors. In this circumstance the incumbent supplier faces the
same challenges they may have faced when they initially convinced the buyer to make the purchase. For competitors
the door is now open and they must work hard to make sure their message is heard by those in charge of the purchase
decision.

3. New Task Purchase - As the name suggests, these purchases are ones the buyer has never or rarely made before. In
some ways new task purchases can be considered as either minor or major depending on the total cost or overall
importance of the purchase. In either case the buyer will spend considerably more time evaluating alternatives. For
example, if faced with a new task purchase, which often involves complex items, such as computer systems, buildings,
robotic assembly lines, etc., the purchase cycle from first recognizing the need to placement of the order may be months
or even years.

THE BUSINESS BUYING PROCESS

There are eight stages of the business buying process. New-task buying situations usually go through all the stages of the
buying process. M Modified straight rebuys may skip some of the stages.

Problem Recognition

The buying process starts when someone in the company identifies a problems or need that can be met by acquiring a
specific product or service. Problem recognition can result from internal or external stimuli. Internally, the company may
decide to launch a new product that needs new production equipment and materials. Or a machine may stop working
and require new parts. Perhaps purchasing manager is not happy with the present supplier's product quality, service or
prices. Externally, the buyer may get some novel ideas at a trade show see an advertisement or receive a phone call
from a salesman who offers a better product at an affordable price.

General Need Description

Having identified a need, the buyer prepares a general need description that explains the characteristics and quantity of
the needed item. For standard items this stage few problems. For complex items, however, the buyer may have to work
with others like engineers, users, consultants to define the item. The team may rank the importance of reliability,
durability, price and other attributes desired in the item. In this stage the marketer may help the buyer define their
needs and give information about the value of different product characteristics.

Product Specification

The buying organization in this step needs to develop the item's technical product description or specification through
the assistance of a technical or engineering team using value analysis. Value analysis is a method to reduce cost in which
components are studied cautiously to know if they can be redesigned standardized or made by less costly manner of
production. The team makes the decision on the best product specifications. Similarly, sellers can use value analysis as a
means to help secure a new account. Through showing buyers a better way of making an object, outside sellers can turn
straight rebuy situations into new task situations that offer them a chance to acquire new business.

Supplier Search
The buyer in this stage searches for a supplier to find the best vendors. The buyer can make a list of qualified suppliers
from information coming from trade directories, Internet or calling other companies for recommendations. Nowadays it
the Internet where more companies look for suppliers. The buyer spends more in money and time for supplier search
especially if it is a new task situation and the item is complex and expensive. The supplier's task is to be part of the host
in major directories and create a good image in the marketplace, Salespeople should make certain that their company is
always considered when buyers are in search of suppliers.

Proposal Solicitation

In this stage of the business buying process, the buyer sends invitation to qualified suppliers to propose. In response to
the invitation, some invited suppliers will either send a catalog or their sales representative. If the item is complex and
expensive, the buyer will comprehensive written proposals of formal presentation from individual potential supplier.
Marketers should be well-versed in researching, writing and proposals in response to buyer proposal solicitations.
Proposals have to be marketing documents not merely technical documents. Presentations need to inspire confidence
and must make the marketer's company be noticeable from the competition.

Supplier Selection

The members of the technical or engineering team reviews the proposals submitted and pick the supplier or suppliers. In
this stage the team must come up with the list of the desired supplier attributes and their comparative significance. The
members of the team will rate the suppliers using the attributes and identify the best supplier. It must also be decided
how many suppliers will be used and maintained. The trend nowadays is less number of suppliers to make it easier to
facilitate inventory.

Some even use single sourcing. Although, many firms are still reluctant toward the use of single sourcing. They fear that
they become over dependent to a single supplier or the single-source supplier may become over-comfortable in the
relationship and lose its competitive edge.

Order-Routine Specification

This time the buyer prepares an order-routine specification. An order-routine specification consists of the final order
with the chosen supplier or suppliers and make a list items like technical specifications, quantity needed, expected time
of delivery, return policies and warranties. In the case of maintenance, repair and operating items are included.

Performance review
Mainly the Consumer Behavior or the satisfaction level of users serves as the basis of the performance reviewing factor.
Particularly for the product purchased from business suppliers. So, the performance review helps in the future decisions
of the business buying process.