PARAPHRASE

Stages in the Buying Process

1. Problem recognition - The buying process starts when a firm employee spots a need that can be
filled by purchasing an item or service.
2. General need description and Product specification - The customer then decides the overall
attributes and needed quantity of the item. This is easy if the items are common. When purchasing
complicated goods, the buyer will collaborate with engineers and users to determine qualities like
dependability, durability, and cost. Company marketers may assist by outlining how their goods
satisfy or even surpass the demands of the customer.
3. Supplier search - Via trade directories, interactions with other businesses, trade ads, trade
exhibitions, and the internet, the buyer strives to find the best suppliers.
4. Proposal solicitation - The buyer requests bids from capable providers. The proposal will be
prepared and comprehensive if the item is complicated or pricey. The buyer will select a few
providers to make formal presentations after analyzing the bids.
5. Supplier selection - Buyer centers frequently employ a supplier-evaluation methodology to rank
and discover the most desirable suppliers.

6. Order-routine specification - The buyer negotiates the terms of the purchase, outlining the
technical requirements, the required quantity, the anticipated delivery date, return policies,
warranties, etc.
7. Performance review - The performance of the selected providers is frequently reviewed by the
buyer. A supplier relationship may be continued, altered, or terminated as a result of the
performance evaluation.
F. Identifying Market Segments and Targets
A lot of businesses are increasingly using target marketing to compete more successfully. Instead of
spreading out their marketing initiatives, they are concentrating on the customers who have the best
possibility of being satisfied. Marketers must: to execute effective target marketing
1. Determine and describe separate buyer groups with various demands and preferences (market
segmentation).
2. To enter the market, choose one or more segments (market targeting).
3. Determine and share the unique benefits of the company's market offering with each target category
(market positioning).

Bases of Segmenting Consumer Markets

Market Segment - A collection of clients that have a similar set of needs and wants is referred to as
a market segment. Choosing which market segment(s) to target depends on the marketer's ability to
determine the right number and type of market segments. To divide up the consumer market, we use two
large categories of variables. By examining geographic, demographic, and psychographic descriptive
qualities, some studies attempt to establish segments. Some studies make an effort to categorize groups by
taking behavioral factors like customer reactions to advantages, use scenarios, or brands into account. The
researcher then checks to determine if certain traits are connected to each section of customer reaction.
Regardless of the segmentation method we choose, the most important thing is to adapt the marketing
strategy to account for client variations.
- Geographic Segmentation - The market is segmented geographically into divisions like countries,
states, regions, counties, cities, or neighborhoods. The business may operate in one or a few
locations, or it may run everywhere while taking into account regional differences. This allows it to
customize marketing campaigns to meet the requirements and preferences of regional consumer
groups in shopping districts, communities, and even specific establishments. Such initiatives focus
on getting as close and personally relevant to individual customers as possible, a trend known as
grassroots that is on the rise.
- Demographic segmentation - Based on factors including age, family size, family life cycle, gender,
income, occupation, education, religion, race, generation, nationality, and social class, demographic
segmentation separates the market. The fact that demographic factors are frequently linked to
customer requirements and wants is one of the reasons why marketers love using them. Also, they
are simple to quantify.
Following are some examples of how marketers have segmented audiences using various demographic
factors:
a. AGE AND LIFE-CYCLE STAGE - Consumer preferences and skills evolve with age.
b. LIFE STAGE - Even if they are in the same stage of life, people might have different life stages. A
person's primary worry is determined by their life stage, which includes things like being divorced,
getting married again, caring for elderly parents, choosing to cohabitate, choosing to purchase a new
home, etc. These phases of life offer chances for marketers who can alleviate people's primary
worries.
 c. GENDER - Because of their distinct attitudes and behaviors, men and women behave differently in
part due to their genetic make-up and socialization. Men are more self-expressive and goal-directed,
whereas women tend to be more socially conscious. Men, on the other hand, prefer to concentrate
on the aspects of their surroundings that will assist them achieve their objectives.
d. INCOME SEGMENTATION - The practice of income segmentation has a long history in
industries including transportation, apparel, cosmetics, financial services, and tourism.
Unfortunately, income does not necessarily indicate who will buy a product at the greatest price.
e. GENERATION - Each generation or cohort is significantly impacted by the times in which it is
raised, including the popular culture, popular movies, politics, and significant historical events.
Members have similar outlooks and ideals and share the same significant cultural, political, and
economic experiences.
f. RACE AND CULTURE - Multicultural marketing is a strategy that acknowledges that many
ethnic and cultural groups have sufficiently distinct requirements and wants to call for customized
marketing efforts, and that a mass market strategy is not sophisticated for the variety of the market.
The first and second (or more) generations, immigrants, and Americans born and raised are
all different in the multicultural markets. Multicultural markets' customs, linguistic quirks,
purchasing patterns, and business procedures need to be taken into account while developing a
marketing plan rather than being included as an afterthought. The ramifications of all this variation
for marketing research are likewise significant; accurate target market profiling need meticulous
sampling. Different marketing messages, media, channels, and other factors may arise as a result of
multicultural marketing.Virtually every minority group or culture sector may be reached via
specialized media, while some businesses have had trouble providing the necessary funding and
administration for fully developed programs. Thankfully, as cultures in countries become more
varied, many marketing initiatives that are directed at one particular ethnic group may spread and
have a good impact on others.
- Psychographics segmentation the discipline of utilizing psychology and demographics to better
understand customers is known as psychographics segmentation. Buyers are split into several
categories according to psychological or personality qualities, lifestyle, or values in psychographic
segmentation. The psychographic characteristics of individuals within the same demographic
category might differ greatly.

- International VALS is a segmentation methodology that can be applied to learn more about
consumers in various nations and be helpful for communication and marketing plans that are
specific to those countries. International VALS, which includes VALS for China, the Dominican
Republic, Japan, Nigeria, the United Kingdom, and Venezuela, gives country-specific frameworks
based on cultural distinctions between attitudes and behaviors as they exist in various nations.
-
Based on two crucial consumer characteristics—primary motivation (tradition, success, and self-expression)
and views toward social change—

Japan-VALS divides Japanese society into many categories (innovation and self-expression). A person's
primary motivation can be summed up as their greatest interests in life, work, and leisure.
Integrators receive the best scores for innovation on the Japan-VALS scale. They use a variety of media
and are active, trend-setters, knowledgeable, wealthy, and well-traveled.

Self-expression is highly rated for self-innovators and self-adapters. They are trendy, outgoing, and look
for adventure.

Ryoshiki Innovators and Ryoshiki Adapters are motivated by careers that place a personal emphasis on
learning, professional development, and career success. Their primary priorities are their homes, families,
and social standing.

Traditional Innovators and Traditional Adapters tend to hold conservative views and are especially
concerned with elements of tradition, such as religions and customs. They favor conventional fashion and
interior design.
 High Pragmatics and Low Pragmatics are less engaged, less knowledgeable, and lack overt interests and
behavioural preferences. They do poorly on any life-orientation test.

Sustainers get the lowest scores on the criteria of innovation and self-expression and favor maintaining the
status quo. They are underfunded, young, and poorly educated.

United Kingdom VALS (UK VAL) - Consumers are categorized into one of six primary classifications
by . Segments are established according to major motive (tradition, achievement, and self-expression),
resource availability (high or poor), and innovation.

Activators are The most receptive to innovation, new concepts, and goods . They are innovators who have
a diverse range of interests. Tradition, success, and self-expression activators further split this group
according to motivation.

The majority of traditionalists are conservative, and they favor managing societal change by critically
evaluating novel concepts in light of tried-and-true ones that have firmly established moral norms.

Achievers build their success on their efforts and career goals. They tend to place a strong emphasis on
family, expertise, influence, and credentials and are success-oriented.

Seekers - The individualism, self-knowledge, and activity is what they value the most. They aggressively
pursue fulfillment for themselves, excitement, and sociability.
Pragmatics desire to stick with their peer group and prefer to play it safe. They are not overly attached to
any specific way of life. The motive of pragmatics can be used to distinguish between them: pragmatic
Aspirationals are driven by self-expression, pragmatic Rationals are motivated by achievement.

Constraineds people frequently return to the past and familiar things. They prioritize their family and have
a few pals who agree with their views.
behavioral segmentation. Marketers divide consumers into groups according to their familiarity with,
attitude toward, use of, or reaction to a product.

A. NEEDS AND BENEFITS. Not every person who purchases a thing does so because they have the same
needs or because they desire the same benefits from it. Because it reveals discrete market categories with
obvious marketing consequences, needs-based or benefit-based segmentation is a method that is frequently
utilized.
B. DECISION ROLES. For many things, it is simple to locate the customer. Men typically choose their razors
and women typically choose their pantyhose, but even in this case marketers must be cautious when
choosing their target demographics because purchasing roles might shift. The large British chemical
corporation ICI decided to market its Dulux brand to women after learning that they choose domestic
paint brands 60% of the time. In a purchasing decision, people perform five roles: initiator, influencer,
decider, buyer, and user.
C. USER AND USAGE—REAL USER AND USAGE-RELATED VARIABLES
 Occasions designate a specific day of the week, month, or year in a consumer's life or other clearly
defined temporal elements. Buyers can be divided into three categories based on when they
become in need of, buy, or use a product.
 Every product has its share of nonusers, ex users, potential users, first-timers, and devoted users.
Blood banks must find new first-time donors and get in touch with former donors, each with a
separate marketing plan, because they cannot rely solely on regular donors to give blood.
 We can divide markets into light, medium, and heavy product users based on usage rates. Heavy
consumers typically make up a small portion of the total population yet consume a significant
amount of it.
 Stage of Buyer Readiness. Some people are oblivious of the product, while others are
knowledgeable about it, some are interested in it, some want it, and some plan to purchase it.
Marketers can use a marketing funnel to segment the market into several buyer-readiness phases
to assist define how many individuals are at different stages and how well they have converted
customers from one stage to another. The proportions of customers at various phases have a
significant impact on how the marketing program is designed.Let's say a health organization wants
to persuade women to have a Pap test every year to check for cervical cancer. Most women might not
be aware of the Pap test at first. The focus of the marketing strategy should be on awareness-raising
advertising with a straightforward message. The promotion should later emphasize the advantages of
the Pap test and the dangers of forgoing it. Free health screenings as an unique incentive could
persuade women to sign up for the test.
 According to brand loyalty status, marketers typically divide consumers into four categories:
1.Hard-core loyals—consumers who consistently purchase only one brand
2. Split loyals- or customers that support two or three brands
3.Shifting loyals— Customers who switch their allegiance between different brands
4.Switchers——Customers who don't stick with any one brand
Hard-core brand loyalists can help identify the products' strengths; split loyalists can show the company
whose brands are most competitive with its own; and by observing customers quitting its brand, the
company can learn about its marketing flaws and strive to remedy them.

Attitude. Consumer views toward items might be enthusiastic, positive, neutral, antagonistic, or
indifferent. In a political campaign, door-to-door workers use each voter's attitude to gauge how much
time to spend with them. They express gratitude to enthusiastic voters and remind them to cast their
ballots, encourage those who are inclined toward positivity, work to win over neutral voters, and waste no
time in attempting to persuade hostile and negative voters to change their minds.

Multiple Bases. Integrating various behavioral bases can result in a more thorough and coherent
understanding of a market and its segments. One approach to segmenting behavior is shown in the
accompanying picture, which represents a variety of behavioral bases.

Behavioral Segmentation Breakdown

Segmenting for Business Markets

Purchase criteria can be used to further segment a business. Government labs require low
cost scientific equipment and service contracts, academic labs require equipment that requires
little maintenance, and industrial labs require equipment that is extremely accurate and reliable.
Business marketers typically use a sequential procedure to determine segments. Take the case of
an aluminum corporation, which started with macrosegmentation. It considered which end-use
market to serve: beverage containers, homes, or automobiles. It selected the residential market
and had to decide which product application—semifinished goods, building materials, or
aluminum mobile homes—was the most alluring. It chose large customers after carefully
weighing the ideal customer size and deciding to concentrate on developing components. The
microsegmentation process made up the second stage. The business distinguished between
clients who bought based on price,quality or service. The company made the decision to focus on
the market segment that was driven by service since it had a high service profile. James C.
Anderson and James A. Narus, experts in business-to-business marketing, have pushed marketers
to offer flexible market options to every sector participant. A flexible market offering is made up
of two components: a bare solution that includes the characteristics of the product and service
that are valued by all segment members and discretionary options that are valued by some
segment members. There can be an extra cost for each choice. The Siemens Electrical Apparatus
Division offers installation, tests, and communication peripherals as additional costs in addition
to selling metal-clad boxes to small manufacturers at prices that include free delivery and a
warranty.Delta Airlines offers all economy passengers a seat, small snack and soft drinks and
charges extra for alcoholic beverages and meals.

Marketing targeting
For creating market segments, various statistical methodologies are available. The company must choose
how many and which market-segment opportunities to target once it has discovered those chances. In an
effort to pinpoint more narrowly defined target groups, marketers are increasingly integrating many
variables. So, a bank may not only identify a group of affluent retired folks but also identify different
segments within that group based on current income, assets, savings, and other factors.
risk inclinations This has prompted some market analysts to support the previously mentioned needs-based
market segmentation strategy.

Effective Segmentation Criteria

Not all segmentation schemes are useful. To be useful, market segments must rate favorably on five key
criteria:
•Measurable. The segments' size, purchasing power, and features can all be quantified.
•Substantial. The markets are substantial and lucrative enough to serve. A segment should be the
broadest, most homogeneous group that is worthwhile of being targeted by a certain marketing strategy.
For instance, it would not be profitable for a car manufacturer to create vehicles for persons who are
shorter than four feet tall.
•Accessible. It is possible to successfully reach and service the segments.
• Differentiable. The segments can be conceptually distinguished from one another and react differently
to various marketing mix components and initiatives. Married and single women do not make up separate
categories if they react to a perfume advertisement similarly.
•Actionable. The segments can be attracted to and served by effective initiatives.

Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a
market or market segment: industry competitors, potential entrants, substitutes, buyers, and
suppliers. The threats these forces pose are as follows:
1. Threat of intense segment rivalry—If a market segment already has many, potent, or hostile
competitors, it is undesirable. It becomes even less appealing if it is stable or declining, if plant
capacity must be added gradually, if fixed costs or exit barriers are significant, or if competitors
have a lot riding on the segment's continued existence. These circumstances will make it costlier to
compete by causing frequent pricing wars, advertising conflicts, and new product releases. Due to
segment rivalry, the mobile phone market has experienced intense competition.
2. Threat of new entrants- A market sector with high entry barriers and low exit barriers is the
most appealing. Few new businesses may enter the market, and companies that perform poorly can
readily leave. Profit potential is high when entrance and exit barriers are high, but businesses run a
higher risk since underperforming firms are forced to stay in and compete. When obstacles to entry
and departure are minimal, businesses can enter and exit an industry with ease, and returns are
stable but modest. The worst scenario is when departure obstacles are high and entry barriers are
low, which makes it difficult for businesses to exit during difficult economic times. Chronic
overproduction and low profitability are the results. The airline industry has low entry barriers but
high exit barriers, leaving all carriers struggling during economic downturns.
3. Threat of substitute products— If there are viable alternatives to the product, a segment is
unattractive. Prices and profit margins are constrained by substitutes. Prices and earnings may
decrease if technology develops or if competition in these substitute businesses rises.
4. Threat of buyers’ growing bargaining power— If buyers have a significant amount of or
increasing bargaining power, a segment is undesirable. When consumers are more organized or
concentrated, when the product accounts for a sizable portion of their costs, when the product is
undifferentiated, when switching costs are low, when consumers are price-sensitive due to low
profits, or when consumers can integrate upstream, consumers' bargaining power increases. Sellers
may choose customers with the least negotiating clout or transfer suppliers in order to protect
themselves. Creating outstanding offers that powerful purchasers cannot refuse is a better line of
defense.
5. Threat of suppliers’ growing bargaining power— A market sector is unappealing if a
company's suppliers can increase prices or cut back on supply. When there are few substitutes,
when the given product is a crucial input, when moving suppliers is expensive, and when suppliers
are concentrated or coordinated, they tend to be powerful. Building mutually beneficial connections
with suppliers or utilizing numerous supply sources are the greatest defenses.

Evaluating and Selecting the Market Segments

Marketers can use a spectrum or continuum of segmentation levels to inform their target market
choices. The following image illustrates how individuals or segments of one person are at one end
and a mass market made up largely of one segment at the other. There are both several segments
and single segments between. Next, we go over each of the four strategies.

Possible Levels of Segmentation

Full market coverage refers to a company's effort to provide all possible product
options for all client segments. Only very large companies, like Coca-Cola (non-
alcoholic beverage industry), General Motors (car market), and Microsoft (software
market), can implement a comprehensive market coverage approach.

Large firms can cover a whole market in two broad ways: through differentiated or
undifferentiated marketing

Undifferentiated or mass marketing ignores segment distinctions in favor of pursuing

the entire market with a single offer. It creates a marketing strategy for a product with a
superior reputation that can be marketed to the largest possible audience through mass
marketing and distribution. When there are no obvious market groups and most
consumers have similar tastes, undifferentiated marketing is appropriate. The case for
mass marketing is that it expands the possible market to the greatest extent, resulting in
the lowest expenses, which can therefore result in cheaper pricing or larger margins. The
narrow product line keeps down the costs of research and development, production,
inventory, transportation, marketing research, advertising, and product management.
A scheme of undifferentiated communication also saves money. To reach a large
audience, critics argue, is becoming harder and more expensive due to the market's
widening fragmentation and the proliferation of marketing channels and communication.
Marketers can create various segments when different consumer groups have distinct
demands and preferences. The business can frequently improve the product or service in
terms of design, pricing, disclosure, and delivery. It can also make minor adjustments to
the marketing strategy and campaign. The company provides several products to each of
the many market categories through specialized marketing. cosmetics company

Generally speaking, differentiated marketing generates higher overall sales than

undifferentiated marketing. Yet it also drives up the price of conducting business. No
generalizations about distinctive marketing's profitability are true because it results in increased
costs and sales.
MULTIPLE SEGMENT SPECIALIZATION. Selective specialization involves a company
choosing a subset of all feasible segments, each of which is ostensibly appealing and acceptable.
Although there might be little to no overlap between the divisions, each one looks to be
profitable. The benefit of spreading out the firm's risk is another benefit of the multisegment
method. Companies can aim to operate in supersegments rather than in discrete segments by
keeping synergies in mind. A group of segments with one or more exploitable similarities make
up a supersegment. For instance, many symphony orchestras seek out individuals with varied
cultural interests rather than just concertgoers. A company may also try to create some synergy
by specializing in a certain product or market.

With product specialization, the company can sell a specific product to a variety of market
sectors. For instance, a producer of microscopes sells to government, academic, and commercial
laboratories, producing various devices for each and establishing a solid name in the industry.
The possibility that a totally new technology may replace the product is a negative risk.

Through market specialization, the business focuses on meeting the diverse needs of a certain
customer base, such as by offering a range of items exclusively to academic laboratories. The
business establishes a solid reputation with this clientele and turns into a distribution point for
more goods that its users can access. The client group running the risk of budget cuts or size
reduction.
SINGLE-SEGMENT CONCENTRATION. When a company markets to just one specific
segment, this is known as single-segment concentration. Volkswagen focuses on the small-
vehicle industry, while Porsche focusses on the sports car market. The company develops a
strong market presence and a thorough understanding of the needs of the sector through targeted
marketing. By specializing in its production, distribution, and promotion, it also benefits from
operating efficiencies. The business can generate a significant return on investment if it gains
segment leadership.

A niche is a more specifically defined consumer base looking for a unique combination of
advantages within a segment. Usually, niches are found by segmenting a market into smaller
ones. Enterprise has been very successful by forging distinctive links between convenience and
cheap cost in a specialized industry that hasn't been well explored. The goal of niche marketers is
to fully comprehend the needs of their target market such that they will gladly pay a premium.

What characteristics define a desirable niche? Consumers have specific wants, they will pay
more to the company that best meets them, the niche is relatively small but has potential for size,
profit, and growth and is unlikely to draw many competitors, and the niche benefits from some
economies of scale through specialization. When marketing becomes more effective, formerly
unprofitable niches could expand. For instance, there are numerous distinct niches or segments
within the market for women's shoes. Nurses' shoes or shoes for plus-sized women. Within the
greater women's shoe market, these would all be niche markets.

INDIVIDUAL MARKETING Today, buyers are taking more individual initiative in deciding
what and how to buy, leading to "segments of one," "customized marketing," or "one-to-one
marketing." They access the Internet, research information and reviews of available goods and
services, engage in discussions with manufacturers, customers, and product reviewers, and
frequently develop the goods they desire.

Customerization allows customers to create the goods and services they want by fusing
operationally driven mass customization with customized marketing. The company is no longer
required to own the manufacturing or have prior knowledge of the customer. Customers can
"rent" the tools and a platform needed to create their own products. When a business can tailor
its products, services, and communications to each unique consumer, it has successfully become
more customer-centric. Personalization is undoubtedly not right for every business. For
complicated products like vehicles, it could be quite challenging to implement. Also, it may
increase the price of the items beyond what the customer is willing to pay.A customer cannot
cancel an order once the business has begun working on it since some customers don't know
what they want until they see the actual products. The item might be difficult to fix and have
minimal market value. Despite this, some goods have benefited from personalization.

ETHICAL SELECTION OF MARKET TARGETS Marketers must select their consumers

carefully to prevent backlash. Some customers object to being identified. Because singles don't
want to be reminded that they are eating alone, they may not prefer single-serve food packaging.
Market targeting can also cause public controversy when marketers take unfair advantage of
vulnerable groups (such as children) or disadvantaged groups (such as inner-city poor people) or
promote potentially harmful products. Elderly consumers who don't feel their age may not
appreciate products that label them "old." The cereal business has come under fire for its child-
targeted marketing strategies. Opponents are concerned that strong pleas delivered through the
voices of endearing animated creatures may weaken kids' defenses and cause them to crave
sugary cereal or unbalanced breakfasts.Toy marketers have been similarly criticized

The fact that millions of children under the age of 17 are online is another cause for concern.
Advertisers have followed them online and are now providing freebies in exchange for personal
data. Many have come under fire for this behavior and for failing to distinguish effectively
between advertisements and games or entertainment. As consumer advocates rail against the
commercialism they believe such marketing fosters, establishing moral and legal limits in
dealing with children's marketing both online and off is a hot problem that isn't going away
anytime soon. Not all initiatives to reach out to minorities, children, or other specialized groups
are criticized. Colgate Junior toothpaste from Colgate-Palmolive contains unique characteristics
made to encourage kids to brush more frequently and for longer periods of time. Some
businesses are addressing the unique requirements of minority populations.Therefore, the
problem is not who is targeted, but rather how and why. Targeting that benefits not only the
company's interests but also the interests of individuals targeted is necessary for socially
responsible marketing.