05. understanding consumer

THARAKA DIASDirector – Essence BTC

MBA(USA), MBA(Aldersgate),BBA(USA), Dip in Mgt, ACIM(UK), FAEA(Dip in AEA-UK), FinstSMM(UK),

CPM(Asia), MSLIM, PM(Sri-Lanka)

Because no longer can we take the customer/consumer for granted.

Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later.

Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.

3AOT - www.tharakadias.com

All managers must become respect analysts of consumer motivation and behavior

No.

Because cross - cultural styles, habits, tastes, prevents such standardization.

The more successful a firm has been in the past, the more likely is it to fail in the future.

Because people tend to repeat behaviour for which they have been rewarded.

“Please leave your values at the desk” - Paris hotel

“Drop your trousers here for best results” - Bangkok laundry

“The manager has personally passed all water served here” - Acapulco restaurant

“Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested that the lobby be used for the purpose.” - Zurich hotel

Ladies are requested not to have children in the bar.”- Norway bar


“Come alive out of the grave” - Germany

“Pepsi brings your ancestors back from the grave” - China


4 P s M arke tingE nv iro nm ent

B uyerC h ara cte r is t ics

B uyerD e c is io n P roce ss

B uyerD e cis ion

C o nsum er


P ro du ct P rice P lace P ro m o tion

4 P s


E con om ic T e ch no log ica l P o li t ica l C u ltu ra l

M arke tingE nv iro nm ent


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Needs - state of felt deprivation including physical, social, and individual needs (e.g., food)

Wants - form that a human need takes as shaped by culture and individual personality (e.g., pastry)

Experiences Persons

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

Places

Organizations IdeasActivities

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Doesn’t Result in the Ownership of Anything

Consumer Market - All the individuals and households who buy or acquire goods and services for personal consumption. Consumer Buying Behavior The buying behavior of final consumers – individuals and households who buy goods and service for personal or household consumption. (Philip Kotler) Buying behavior is the decision process and actions of people involved in buying and using products.

Problem Recognition Information SearchEvaluation of AlternativesPurchase DecisionConsumptionPost purchase behavior


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Consumer vs. Organizational buying behavior

Main types of buying situations in B2B Stages of decision in B2B Roles in B2B procurement Influences on organizational

behavior Buying centres in summary

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Decisions made by consumers are quite simple Organizational buying processes are more

complicated, there are several phases and steps Different buying behavior for different products

and target groups Simple consumer goods like food and beverages

are bought very spontaneously – influenced by advertising and product presentation

For premium consumer goods (expensive clothes, computers) – buying behavior is getting more rational – comparison

Private investment goods – price bargaining

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More than one person involved Buying process follows certain rules Price comparison, standardisation,

tenders = Ausschreibungen)

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involve more capabilities and greater workloads

From the buyer‘s and the supplier‘s side decision has more extensive consequences

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Industrial plants Manufacturing installations Office buildings

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Straigtht rebuy – routine decision, repetitive process (energy, office supplies, raw materials, wood, cigarettes), component suppliers for the automotive industry – little or no new information

Modified rebuy – more complicated but less sophisticated: cars, trucks, computers, consulting – modified rebuys are often treated too uncautious

New task – calls for thorough research – industrial plant – highest level of uncertainty. Strategic new tasks are of extreme strategic and financial importance (aircrafts, military equipment, infrastructure) – re-evaluation of alternatives and search for new information and new alternatives

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Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order routine specification Performance review

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Backhaus developed a widely usable model to distinguish between 5 phases of procurementPreliminary application (initiation phase)Tender proposalNegotiationProcessing of orderWarranty and services

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Recognition of a problem (need) and a general solution

Released by top management = operating department or external consultants

Result request for an offer addressed to a number of potential suppliers

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Determination of characteristics and quantity of needed items

Search for and qualification of potential sources

Supplier has to provide an offer Tries to be incomparable with his

competitors Customer tries to make the offer best

comparable

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= core selling process Comprises acquisition and analysis

of proposals, evaluation of proposals and selection of suppliers

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Contains selection of an order routine

Realisation of the transaction along with the fixation of after sales service tasks

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Group of people involved in the buying process – buying center

Webster/Wind model shows 5 different roles – not institutionalised

This causes probleme in identifying and targeting the right people within the decision process

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Role keepers have different tasks – not mandatory

Buyer User Initiator Gatekeeper Influencer

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Formal authority to sign contracts Member of purchasing department Influences the vendor selection Not in technical details Main criteria: price + terms and

conditions of the contract

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Person working with the product Interested in benefits and

unobstructed function of the product to buy

Large knowhow and preconceived opinion

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A person with high technical knowledge and practical experience

definition of minimum requirements on technical or company standards

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Controls the flow of information within the buying center

Assistant of decision maker Influence by preparing the decision

and the relevant documents

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Right to say yes or no Mightiest person

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Person who brings new ideas and solutions into the company

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Long decision taking process High risk Complex buying center The specific competitive situation

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Focuses on innovation Has to care for high flexibility in

research and development And manufacturing and assembling

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Strict bid and tender rules High transparency Add value with service offering to

achieve a differentiating position Another aspect: financing and

sourcing models

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Focus on negotiation phase Provide excellent people in the

selling center High technical knowledge

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Problem solver! Proving success with comparable

tasks Reference projects!

Fewer, larger Buyers Geographically Concentrated Derived demand Close Supplier–customer Relationship Professional Purchasing Multiple Buying Influences Direct Purchasing Motives for purchase

AOT - THARAKA DIAS 46

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AOT - THARAKA DIAS

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05. understanding consumer

Marketing

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