mm part-iii(connecting the customer)

8/6/2019 MM Part-III(Connecting the Customer)

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Relationship Officer:ABN AMRO Slide No : 01 ERP Functional Consultant

Marketing Management-I Connecting the Customer

By :

Kumar AmitMBA in International Business (Switzerland)

Bachelor in Computer Science (Chennai)

18th Nov 2008


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Course Contents

What Influences Consumer Behavior

Buying Decision Process: Five Stage model

Organizational Buying

Participants in Business Buying Process

Purchasing/Procurement Process

Institutional & Government markets




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Consumer behavior

Consumer behavior is the study ofhow individuals, groups,

and organizations select, buy, use and dispose of

goods,services,ideas or experiences to satisfy their needsand wants.

Studying consumer behaviorprovides clues forimproving

or introducing products or services, setting prices &

developing other marketing strategies.




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Cultural Factors

Social factors

Personal factors

1

2

3



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Cultural factors exert the broadest & deepest influence.

Culture is the fundamental determinant of a persons wants &behavior. Example:

1.Culture (child growing up is exposed to values, perception)

2. Subculture (nationalities, religions, racial groups)

3. Social class (members share similar values, interests &

behaviors)

Markets used the term called Socioeconomic classification (SEC)to classify buyers in urban areas,A1-A2,B1,B2,C,D,E1,E2 with A1signifying highest purchase potential & E2 signifying the lowest.

Cultural Factors




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Social influence:Information and Pressures fromIndividuals, groups, and the mass media that affect how a

person behaves.e.g Family, Role & Status, Referencegroups (friends, neighbors, co-workers, religious & trade-union groups)

Types of Reference Groups: Aspirational Reference Groups: a group that we admire and desire

to be like, person hope to join.

Associative Reference Groups: a group to which we currentlybelong.

Dissociative reference groups: a group we do not want to emulate

Note: Role consists of the activities a person is expected toperform. Each role carries a status.

Reference group consists of all the groups that have a direct or indirectinfluence on his/her attitude or behavior.

Social Factors




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Buyers decisions are also influenced by personal

characteristics. These includes (examples)

Buyers age & stage in life cycle

Occupation & economic circumstancesPersonality & self concept

Lifestyle & values.

Consumption is shaped by family life cycle. Marketers

also consider critical life events or transitions. Tailor products for certain occupational groups. product

choice is greatly affected by economic situation like

income-saving, assets, debts.

Personal factors




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Personal factors



Personality : all the internal traits and behaviors that make a

person unique.

Uniqueness arrives from a person's heredity and personal

experience. Examples include:

Self confidence

Friendliness

Adaptability

Ambitiousness Introversion

Extroversion

Aggressiveness

Competitiveness.


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Personal factors



Lifestyle is a persons pattern of living in the world as expressedin activities, interests & opinion.

e.g. Recent US trends in lifestyles are a shift towards personal independence

and individualism and a preference for a healthy, natural lifestyle..

Lifestyle is shaped by whether consumers are money-constrained

( Wal-Mart-everyday low prices) ortime-constrained ( multitasking

people, Texas Instrument unveiled a product design called WANDA-

Wireless Any Network Digital Assistant, that allows user to talk on acell phone while web browsing over Wi-Fi while conducting

business via Bluetooth)


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1

4

3

2

5


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Stage 1: Problem Recognition

Buying process starts when the buyer recognizes a

problem or need. Need can be triggered by Internal or Externalstimuli.

Internal stimulus, one of the persons normal needs-hunger(Hunger stimulates your need to eat), thirst, sex-rises to athreshold level & become a drive etc.

External can be stimulatedby the marketer, need totrigger a particular need by gathering information from a numberof consumers.

Problem Recognition




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Information Search



A successful information search leaves a buyer with possible

alternatives, the evoked set(A group of brands that a consumer is both awareof and willing to consider as a solution to a purchase)


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Evaluation of alternatives



1. Consumer sees each product as a bundle of attributes

with varying abilities for delivering the benefits.

2. Rank/weight attributes for each alternative. Assign

percentage of importance.

3. Calculate Customer Values (CV) for each alternative.

4. If not satisfied with your choice then return to the search phase.

Evaluation of Alternatives--need to establish criteria for evaluation.

Expectancy-value model


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Purchase Decision



Purchase decision--Choosebuying alternative, includes product,

Brand, Dealer, Purchasing amount,

Timing, Method of Purchase etc.

ProductChoice

Brand Choice

DealerChoice

Purchase Amount

Purchase Timing

PURCHASE DECISION

Payment Method


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Post purchase Behavior



Post-Purchase Evaluation

Post purchase: Satisfaction or Dissatisfaction

Post purchase Action: CRM programs designed to build long-

term brand loyalty.Post purchase use & disposal: Marketer should also monitor how buyers

use and dispose of the product.

Cognitive Dissonance Is the anxiety that occurs when a customer has second

thoughts immediately following a purchase.

Can lead to customer complaints, brand switching, or discontinuing

Can reduced by: Guarantees and trial, Customer follow-ups,

Confirming information from other users.


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Business Market Vs Consumer Market

Buying Situations

System Buying & Selling

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2

3



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Perform

Business Market Vs Consumer Market




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Perform

Buying Situations




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Perform

System Buying & Selling




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Buying Center

Buying Center Influences

Buying Center Targeting

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2

3



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Initiator: thinks of _______ the product

Influencer: _________ final decision

Decider: Anyone __________ in final decisionBuyer: makes actual purchase

User: uses product

Evaluator: determines __________ from use

Buying Center




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Perform

Buying Center Influences




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Perform

Buying Center Targeting




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Purchasing Orientations

Types of Purchasing Process

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2


20th Nov 2008


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Purchasing

Purchasing refers to a business or organization attempting to

acquire goods or services to accomplish the goals of the

enterprise. Though there are several organizations that attempt

to set standards in the purchasing process, processes can vary

greatly between organizations.

Purchasing is the formal process of buying goods and services.


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Basic Purchasing Process

Requester

Supplier

Valid Item?

Requesterauthorised for

request?

Budget

available?

Issue Purchase Order

Match PO,Invoice &

Goods Receipt

Request Payment / Pay

(detailed method not

shown)

Record expense details / updateaccounts

Reject

Reject

Reject

Purchase Request

Purchase Order

Delivery Note

Goods Received Note Invoice

Copy Purchase Order

N

N

N

N

Y

Y

Y

Y

Payment

Query


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Purchasing Orientation

Three company purchasing orientations:

1. Buying Orientation

2. Procurement Orientation3. Supply chain management orientation


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Buying Orientation

Note: Tactical (method) - a conceptual action used by a unit to achieve a

specific objective.

In this orientation, thepurchaser's focus is short

term & tactic.

Buyers are rewarded on their ability to obtainthe lowest price from suppliers for the given

level of quality and availability.


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Procurement

Typically the word purchasing is not used interchangeably

with the word procurement, since procurement typically

includes Expediting, Supplier Quality in addition to

Purchasing.

Buyers simultaneously seek quality improvements & costreduction.

Buyers develop collaborative relationships with major

suppliers and seek saving through better management of

acquisition, material handling, Inventory levels,etc They work closely with manufacturing groups on MRP to

make sure supplies arrive on time.

Note: Expediting is to speed up the progress of; accelerate or to execute quickly and efficiently


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Supply chain management

SCM-Here purchasings role is further broadened to become

more strategic, tactic & operational.

SCM encompasses theplanning and management of all activities

involved in sourcing, procurement, conversion, and logistics

management activities. Importantly, it also includes coordination and collaboration with

channel partners, which can be suppliers, intermediaries, third-

party service providers, and customers.


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The purchasing process will vary depending on the

types of products involved.

Four kind of Purchasing Processes:

1. Routine products

2. Leverage products

3. Strategic products

4. Bottleneck products





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Routine products: Low value and Cost to the customer

Involve little risk of supply

Customer will seek lowest price & emphasize routine

ordering.

e.g. office supplies

Leverage products High value and Cost to the customer

Involve little risk of supply

Customer will compare market offerings & costs &

supplier needs to show that its offerings minimizes the

customers total cost.

e.g. engine pistons





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Strategic products High value and Cost to the customer

Involve high risk of supply

Customer will want a well-known and trusted supplier &

willing to pay more than the average price.

e.g. mainframe computers

Bottleneck products Low value and Cost to the customer

Involve some risk

Customer will want a supplier who can guarantee a

supply of reliable products.

e.g. spare parts




Note: Mainframe-a large powerful computer, often serving many

connected terminals and usually used by large complex organizations.


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Institutional Markets

Government Markets

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2



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Institutional market consists of school, college &

universities, churches, charitable organizations,

hospitals, nursing homes and other institutions that

provide goods and services to people in their care.

Companies selling their good to this market need

to price carefully because these organizations have

limited purchasing power.

Institutional Market




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Government org. are a major buyer of goods & services.

Government org. typically require supplier to submit bids,

and normally they award the contract to the lowest bidder.

Government spending decisions are subject to publicreview, government org. require considerable paperwork

from supplier, who often complain about excessive

paperwork, bureaucracy,regulation,decision-making delay.

Director General of Supplies & Disposal(DGS&D) is thecentral purchasing organization of Govt of India. This

organization is responsible for procurement & purchase of

supplies required by various department including defense

& railways.

Government Market



mm part-iii(connecting the customer)

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