BA 590 Module 2 Customer Needs. Key Terms Model of Buyer Behavior PSSP Pyramid Problem Solving...
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Transcript of BA 590 Module 2 Customer Needs. Key Terms Model of Buyer Behavior PSSP Pyramid Problem Solving...
![Page 1: BA 590 Module 2 Customer Needs. Key Terms Model of Buyer Behavior PSSP Pyramid Problem Solving Purchase Situation Organizational Buyer Needs.](https://reader035.fdocuments.us/reader035/viewer/2022081503/5697bfdf1a28abf838cb2847/html5/thumbnails/1.jpg)
BA 590BA 590
Module 2
Customer Needs
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Key TermsKey Terms
• Model of Buyer Behavior
• PSSP Pyramid
• Problem Solving
• Purchase Situation
• Organizational Buyer Needs
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Key TermsKey Terms
• Pricing• Pricing Objectives• Discount Pricing• Allowances• Geographic Pricing• Value Pricing• Types of Cost• Demand Curve• Break-Even Analysis
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A Model of Buyer Behavior
5-5
Purchase ReasonTimeSurroundings
PurchaseSituation
MotivationPerceptionLearningAttitudePersonality/Lifestyle
PsychologicalVariables
FamilySocial ClassReference GroupsCulture
SocialInfluence
Problem-Solving Process
Person Does or Does Not Purchase (Response)
Marketing Mixes All Other Stimuli
PersonMakingDecision
Exhibit 5-2
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The Adoption Process
Awareness
Interest
Evaluation
Trial
Decision
Confirmation5-15
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5-7
Drive
Cues
Response
Reinforcement
The Learning Process
Exhibit 5-5
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5-16
Relating the Processes
Problem-solving steps
1. Becoming aware of or interested in the problem
2. Gathering information about possible solutions
3. Evaluating alterative solutions
4. Deciding on the appropriate solution
5. Evaluating the decision
Adoption process steps
Awareness and interest
Interest and evaluation
Evaluation, maybe trial
Decision
Confirmation
Learning steps
Drive
Cues
Response
Reinforcement
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5-6
The PSSP Hierarchy of Needs
Physiological Needs
Safety Needs
Social Needs
PersonalNeeds
Exhibit 5-4
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Exhibit 5-11
5-14
Levels of Problem Solving
Extensive Problem Solving
Limited Problem Solving
Routinized Response Behavior
Involvement Continuum
Low Involvement High Involvement
Low involvementFrequently purchasedInexpensiveLittle riskLittle information needed
High involvementInfrequently purchased
ExpensiveHigh risk
Much information desired
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Purchase SituationPurchase Situation
• Activity-Interest-Opinion
• Situation Influences
• Social Class
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Lifestyle Dimensions
OpinionsOpinions
InterestsInterests
ActivitiesActivities??????????????????????????????????????????????????????????????????????
5-8
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Purchase Situation Influences
SurroundingsSurroundings
TimeTime
Purchase ReasonPurchase Reason??????????????????????????????????????????????????????????????????????
5-12
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Exhibit 5-8
5-10
Social Class Dimensions
1.5%
32%
12.5%
38%
15%
Lower-middle class
Upper-middle class
Upper-class
Lower-lower class
Upper-lower (“working”) class
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5-16
Relating the Processes
Problem-solving steps
1. Becoming aware of or interested in the problem
2. Gathering information about possible solutions
3. Evaluating alterative solutions
4. Deciding on the appropriate solution
5. Evaluating the decision
Adoption process steps
Awareness and interest
Interest and evaluation
Evaluation, maybe trial
Decision
Confirmation
Learning steps
Drive
Cues
Response
Reinforcement
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Organization Buyer NeedsOrganization Buyer Needs
• Buying Centers
• Buyer Seller Relationships
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Buying Centers
BuyingCenter
InfluencersUsers
Gatekeepers Deciders
Buyers
6-4
Exhibit 6-2
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Information sharing
Linkages
Cooperation
Legal bonds
Adaptations
RelationshipRelationshipSupplierSupplier CustomerCustomerSalesperson
QualityR&D
AccountingMarketing
Production
Purchasing manager
Quality
Finance
R&D
ProductionAccounting
Engineering
6-8
Exhibit 6-5
Buyer-Seller Relationships
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PricingPricing
• Strategy Planning Elements
• Objectives
• Flexibility• Skim• Penetration Pricing
• Discounts
• Allowances
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PricingPricing
• Geographic Pricing
• Value Pricing
• Mark-ups
• Types of Cost
• Breakeven Analysis
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Strategy Planning for Price
Exhibit 16-1
Pricingobjectives
TargetMarket
PricePromotionPlaceProduct
Geographicterm —
who paystransportation
and how
Discounts andallowances—to whom and
when
Price levelsover product
life cycle
Priceflexibility
16-3
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Pricing Objectives
Exhibit 16-416-4
Dollar or UnitSales Growth
Growth in Market Share
TargetReturn
MaximizeProfits
MeetingCompetition
NonpriceCompetition
PricingObjectives
SalesOriented
ProfitOriented
Status QuoOriented
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Price Flexibility Policies
• One-price policy• The same price to all customers who purchase products
under essentially the same conditions and quantities• Exchange rate changes may make this difficult in international
markets
• Flexible pricing (e.g., in channels, business markets, expensive consumer shopping products)• Issues:
• Use is increasing because of impact of information technology, customer databases, scanners, etc.
• Selling costs may be higher if prices are negotiated• “Signals” to competitors• Customer dissatisfaction may be a problem• “Gray channels” and cross-shipping
16-5
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Exhibit 16-5A16-6
Price Level Policies
“Skim the cream” pricing involves selling at a high
price to those who are willing to pay before aiming at
more price-sensitive consumers.
Price
Quantity
Initialskimmingprice
Secondprice
Finalprice
Skimming Pricing
Sell at highprice beforereducing tonext price leveland repeat
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Price
Quantity
Penetration Pricing
Wholemarket price
Penetration pricing involves selling the
whole market at one low price.
Exhibit 16-5B16-7
Price Level Policies
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Trade
Quantity Seasonal
DiscountPricing
Sale Cash
16-8
Discount Pricing
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Allowances
Common Kindsof
Allowances
AdvertisingAllowance
Push MoneyAllowance
Trade-InAllowance
StockingAllowance
16-9
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Geographic Pricing Policies
Common Geographic
PricingPolicies
F.O.B.
UniformDelivered
FreightAbsorption
Zone
16-10
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16-11
Value Pricing
Fits with StrategyPlanning
Fits with StrategyPlanning
Target Market andCompetition
Target Market andCompetition
Focus on CustomerRequirements
Focus on CustomerRequirements????????
????????????????????????????????
$$
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Exhibit 17-1
Markup chainin channels
17-3
Key Factors That Influence Price Setting
Pricing objectives
Discounts andallowances
Legal environment
Price flexibility
Geographicpricing terms
Demand
Cost
Price of otherproducts in the line
Competition
Pricesettin
g
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QuestionsQuestions
• Relate the Concept of Stock Turnover to Mass-Merchandising. Use an Example to Explain This
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24.00
30.00
50.00
Producer Wholesaler Retailer
Cost = 24.00 = 80%
Markup = 6.00 = 20%
Cost = 21.60 = 90%
Markup = 2.40 = 10% Cost = 30.00 = 60%
Markup = 20.00 = 40%
Exhibit 17-217-4
Markups
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Six Types of Costs
Total Cost
AverageFixed Cost
Total VariableCost
AverageVariable Cost
Total FixedCost
Average Cost
17-5
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Exhibit 17-6
Total revenue = Price x Quantity $30,000 = $3.00 x 10,000 $40,000 = $2.00 x 20,000 $57,000 = $1.90 x 30,000 $66,000 = $1.65 x 40,000 $75,000 = $1.50 x 50,000 $72,000 = $1.20 x 60,000
17-6
Quantity (000)
Pri
ce
per
un
it
10 20 30 40 50 60 70
$3.00
2.001.90
1.651.50
1.20
Prices Along the Demand Curve
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Exhibit 17-7
Estimated quantity to be sold
Average fixed cost per unit
Quantity demanded at selling price
Cost-oriented selling price per unit
Average total cost per unit
Variable cost per
unit
Profit per unit
?
17-7
Summary of Relationships Summary of Relationships Affecting PriceAffecting Price
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Exhibit 17-817-8
Break-even Analysis
To
tal R
eve
nu
e a
nd
Co
st
Units of Production
Break-Even Point
Profit Area
Total Fixed Costs
Total Variable Costs
Total Cost Curve
Total Revenue Curve
Loss Area
More0
Higher
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Evaluating a Customer’s Price SensitivityEvaluating a Customer’s Price Sensitivity
• Are there substitute ways of meeting a need?
• Is it easy to compare prices?
• Who pays the bill?
• How great is the total expenditure?
• How significant is the end benefit?
• Is there already a sunk investment related to the purchase?
17-10
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Demand-Oriented Pricing
17-11
Odd-Even
Prestige Value-in-Use
Reference
Price Lining Leader
Bait
Psychological
Types ofDemand-Oriented
Pricing
Demand Backward
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Demand Oriented PricingDemand Oriented Pricing
• Value in Use - Priced on What Consumers Will Save By Using the Product
• Reference Price - Price Expected• Leader Pricing - Bargain Price• Bait Pricing - Low Price and
Then Switch
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Demand Oriented PricingDemand Oriented Pricing
• Psychological Pricing - Ranges Have the Same Appeal (Stair Function)
• Odd-Even - “99 Cents”• Price Lining - A Few Price Levels,
Then Marking All At Those Prices• Demand Backward - Work
Backward From Price Consumer is Willing to Pay
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Demand Oriented PricingDemand Oriented Pricing
• Prestige Pricing - High Price = High Quality
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QuestionsQuestions
• Distinguish Between Leader and Bait Pricing
• What Do They Have In Common?
• How Can Their Use Affect the Marketing Mix?
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Full-Line Pricing
Product-BundlingPricing?
Product-BundlingPricing?
ComplementaryPricing?
ComplementaryPricing?
Market- or FirmOriented?
Market- or FirmOriented???????????
????????????????????????????????????????
17-12