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IntroductionTO MARKETING MANAGEMENT.pptx

IntroductionTO MARKETING MANAGEMENT

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Marketing Management Dr Shefali Department of Management
Customers reviews about marketing • https://www.youtube.com/watch?v=Aky6cD38xCc&t=75s • Customer Story • https://www.youtube.com/watch?v=W-MFPUQbY9Y&t=11s(1) • https://www.youtube.com/watch?v=SHFt2NJPd34&t=1s(2)
• Discus Vendor side too • https://www.youtube.com/watch?v=coe_GGs4EfE&t=10s
What is Marketing? •Marketing has been derived from word “Market”. •Place where buyers and sellers meet to exchange products and services for money. •In old days Marketing was process of telling and selling goods and services produced by a business. •All those activities related to market. (producing, selling, advertising, after sales services)
Meaning • Meeting needs profitably.(Google-powerful search engine to access information) • Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. • Kotler defined Marketing as 'a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others'. • More simply: Marketing is the delivery of customer satisfaction at a profit. Eg. IKEA Global leader in home furnishing(Sweden in1943)
Is Marketing management art or science? • Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. • The belief that marketing management is an art comes from the fact that, as a practice in business, it relies on creativity to deploy resources and services for profitability. • Similar to any other art, it is this intuition combined with imagination, motivation and practice that makes marketing management possible. • Marketing is also an approach that relies on data and numbers to arrive at workable decisions.
Since decades, various experts, authors and professionals describe marketing in different ways using different routes. Some of these descriptions are given in the table below. Because marketing is more than each of these terms taken separately, and individually. It's a collective synergy of each of these individual dimensions. A sum that is more than the individual parts. And that is the beauty of marketing.
What is Marketed?(geesop3) 1. Goods- Cars, TV 2. Services- Airlines, Hotels, Banks, Beauticians 3. Events-Olympics, World Cup 4. Experience-KOD 5. Persons-CEO, Lawyers, Doctors 6. Places- Chandni Chowk, Lajapat nagar, India Gate, Pink city, 7. Properties-Residential, Commercial 8. Organizations-College, University, Museum, DU
Key Customer Market • Consumer Market-mass consumer goods and services (shoes, cosmetics, juice) • Business Market-business goods & services (spare parts, industrial goods) • Global Market-different countries (China, Japan) • Non- Profit and Govt. Markets –ltd Purchasing (churches, temples, charitable organizations, universities)
Core Marketing Concepts Products and Services Value, satisfaction, and quality Needs, wants, and demands Exchange, transactions, and relationships Markets Core Marketing Concepts
What Motivates a Consumer to Take Action? •Needs – Basic human requirements such as for air, food, water, clothing, shelter. i.e. Buy a car •Stated needs ( Inexpensive car) •Real needs (Low Price) •Unstated needs (Good Service) •Delight needs (Onboard GPS system) •Secret needs (friends see- savvy customer)
Continued….. • Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a BMW. • Demand - human wants backed by buying power. i.e. I have money to buy a Mercedes.
What Will Satisfy Consumer’s Needs and Wants? • Products - anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a need or want. • Examples: persons, places, organizations, activities, and ideas. • Services - activities or benefits offered for sale that are essentially intangible and don’t result in the ownership of anything. • Examples: banking, airlines, haircuts, and hotels.
How do Consumers choose among Products and Services? •Customer Value - benefit that the customer gains from owning and using a product compared to the cost of obtaining the product. •Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. Linked to Quality and Total Quality Management (TQM).
How do Consumers Obtain Products and Services? •Exchanges - act of obtaining a desired object from someone by offering something in return. •Transactions - trade of values between parties. Usually involves money and a response. •Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers.
Who Purchases Products and Services? Market - buyers who share a particular need or want that can be satisfied by a company’s products or services. Actual Buyers Potential Buyers
Modern Marketing System Suppliers End User Market Marketing Intermediaries Competitors Company (Marketer) Environment Environment
Marketing Management- Philosophies Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept • Inexpensive and easily available •Large scale production to reduce cost (HUL) •High quality, performance, and innovative features(APPLE) Focus on quality and improvisation •Goods are not bought, but sold •Focus on Aggressive selling and Promotional efforts (SALE) •Focuses on needs/ wants of target markets Delivering satisfaction better than competitors •Consumer satisfaction of target markets •Environment friendly
Societal Marketing Concept Society (Human Welfare) Consumers (Wants) Company (Profits) Societal Marketing Concept
• Another recent example comes from Nestlé. The company is on a mission to make farming and farmer’s life better. So, they will have resources to cultivate quality cocoa that will be transformed into premium chocolate. • https://www.youtube.com/watch?v=CaA3S1sYSpc&t=18s(Samsung Technical School) • https://www.youtube.com/watch?v=RiMMpFcy-HU&t=29s(Coke super bowl) https://www.youtube.com/watch?v=iEg7aQvUTks (Farmers)
Examples • Philips India started with audio system ,forayed into household kitchen appliance. • Fast food industry-Hamburger offers tasty but unhealthy foods. (wrapped leads to waste and environment degradation.) According to Jagdish Seth & Rajender Sisodia- 4A • Acceptability, • Affordability, • Accessibility, • Awareness
Marketing & Sales Concepts Contrasted Factory Existing Products Selling and Promoting Profits through Volume Market Customer Needs Integrated Marketing Profits through Satisfaction The Selling Concept The Marketing Concept Starting Point Focus Means Ends
• Marketing process involves selling but selling is not marketing. • Marketing starts with the consumer. However, selling starts with the marketer or with the manufacturer. • Suppose, You have some items which you want to sell. So, now you go ahead and start looking for customers to buy those items. Then you call that selling. • So, the unsolicited calls that you get from credit card companies, from banks, from various other online sales or telephone sales companies—that will be part of selling. • However, if you have asked the Eureka Forbes guys come up to your individual house and show you the demo and then you decide whether you want to buy or you don't want to buy—that is part of marketing.
Today’s companies also have new capabilities as given below:- • Ability to operate powerful information and sales channels. • Ability to collect fuller and richer information about markets, customers, prospects, and competitors. • Faster internal communication amongst employees. • Two-way communication with customers and prospects. • Send ads, coupons, samples, and information to customers. • Customize offerings and services to individual customers. • Improved, purchasing, recruiting, and training. • Improved external communication. • Improved logistics and service quality
Marketing Process • Understand the market • Design Products to satisfy Needs & Wants • Develop an integrated marketing program • Build profitable relationship with customer and offer customer delight • Capture value from customers to create profits from customers to create profits and customers loyalty
Expanded model of Marketing process
Emerging Challenges Nonprofit Marketing New Marketing Landscape & Information Technology Ethical Concerns Globalizatio n Changing World Economy New Marketing Challenges
The changing marketing landscape The digital age: Online, mobile and social media marketing •The information revolution has reached a critical point where a new information-based infrastructure is unfolding as we witness the convergence of telecommunications, media and technology (TMT) in the form of computer systems, information services and consumer/professional electronics. •Digital and social media marketing involves the use of digital marketing tools, such as websites, social media, mobile ads and apps, online video, email, blogs and other digital platforms, to engage consumers anywhere, anytime via their computers, smartphones, tablets, internet-ready TVs and other digital devices.
• Social media marketing •It is difficult to find a brand website, or even a traditional media ad, that does not feature links to the brand’s Facebook, Twitter, Google+, LinkedIn, YouTube, Instagram, Pinterest or other social media sites. •Online social media provide a digital home where people can connect and share important information and moments in their lives. •They offer an ideal platform for real-time marketing, by which marketers can engage consumers in the moment by linking brands to important trending topics, real-world events, causes, personal occasions or other important happenings in consumers’ lives.
Mobile marketing •Mobile marketing is perhaps the fastest-growing digital marketing platform. Four out of five smartphone users use their phones to: Access their bank account for online transfers and payments Browse product information through apps or the mobile web Make in-store price comparisons Read online product reviews Find and redeem coupons
The challenging world economy •In today’s post-recession era, consumers are now showing an enthusiasm for frugality not seen in decades. •Sensible consumption has made a comeback, and it appears to be here to stay. The new consumer spending values emphasise simpler living and more value for the dollar. •Companies in all industries –from discounters to luxury brands – have tightened their budgets and aligned their marketing strategies with the new economic realities. •More than ever, marketers are emphasizing the value in their value propositions. They are focusing on value-for-the-money, practicality and durability in their product offerings and marketing pitches.
Measuring marketing’s contribution to organizational performance •Businesses exist to create wealth for their owners. •Performance measurement has increasingly become the domain of marketing management. •Objective (independently reported from such sources as company reports) and subjective (self-reported by managers) performance measures are used to assess performance. •There is no unequivocal answer as to which measures to use and what value-adding contribution marketing makes to both profit- oriented and not-for-profit organisations. The growth of not-for-profit marketing •Not-for-profit marketing is a kind of marketing that is practiced by a variety of organisations whose aim is to make surpluses so as to continue their operations, but that do not seek to make profits for shareholders.
Rapid globalisation •Geographical and cultural distances have shrunk with the advent of such technological advances as: Jet airliners Telephone links Digital satellite-television broadcasting Internet email and instant messaging Social networking Internet-capable smartphones Video-over-IP phone services
Rapid globalisation •Technological advances have allowed companies to expand significantly their geographical market coverage, purchasing and manufacturing. The result is a vastly more complex marketing environment for both companies and consumers. Sustainable marketing: The call for more environmental and social responsibility •Today’s marketing environment obligates companies to take responsibility for the social and environmental impact of their actions. •Corporate ethics have become an important matter in almost every business arena, from the corporate boardroom to the business-school classroom.
The Marketing Mix • The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs. • The marketing mix is often called the 4Ps: • Product • Price • Place • Promotion The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives •7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment •Traditional 4Ps extended to cope with today's changing environment
The Marketing Mix
The marketing environment •A company’s marketing environment consists of the actors and forces outside of marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. Companies constantly watch and adapt to the changing environment. •Marketers must be the environmental trend trackers and opportunity seekers. Marketers have two special aptitudes. They have disciplined methods –marketing research and marketing intelligence –for collecting information about the marketing environment. •Marketers spend more time in customer and competitor environments. By carefully studying the environment, marketers can adapt their strategies to meet new marketplace challenges and opportunities.
The company’s microenvironment
The company •The company has the following components: ▪Top management ▪Finance ▪Purchasing ▪Accounting ▪Operations ▪R & D
Suppliers •Suppliers form an important link in the company’s overall customer value delivery system. •Most marketers today treat their suppliers as partners in creating and delivering customer value. Marketing intermediaries are the businesses that help the company to promote, sell and distribute its products to final buyers. •Following are the types of marketing intermediaries: ▪Resellersare distribution channel firms that help the company find customers or make sales to them. ▪Physical distribution firms help the company to stock and move goods from their points of origin to their destinations.
• Marketing services agencies are the marketing research firms, advertising agencies, media firms and marketing consulting firms that help the company to target and promote its products to the right markets. • ▪Financial intermediaries include banks, credit companies, insurance companies, accountants and other businesses that help finance transactions or manage the risks associated with the buying and selling of goods. • Competitors • •Suppliers form an important link in the company’s overall customer value delivery system. To be successful, a company must provide greater value than its competitors. • •Marketers must do more than simply adapt to the needs of target consumers; they must gain strategic advantage by positioning their offerings strongly against competitors.
Publics are any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its objective. •Publics can be: ▪Internal, local, general and financial •Publics may also include: ▪Media, government and citizens’ action groups Customers •Companies might target any or all of five types of customer markets. •Each market type has special characteristics that call for careful study by the seller. •The five types of customer markets are: ▪Consumer markets consist of individuals and households that buy goods and services for personal consumption. ▪Business markets buy goods and services for further processing or for use in their production process.
Reseller markets buy goods and services to resell at a profit. ▪Government markets are made up of government agencies that buy goods and services to produce public services, or to transfer the goods and services to others who need them. ▪International markets consist of these buyers in other countries, including consumers, producers, resellers and governments.
The company’s macroenvironment
Demographic environment •Demography is the study of human populations in terms of: ▪Population size, density and diversity ▪Location and geographic population shifts ▪Age, gender, family size and structure ▪Educational characteristics and occupation ▪Race and ethnicity ▪Other relevant demographic statistics •Marketers keep close track of demographic trends and developments.
Changing age structure of the population •Baby boomers are people born during the period following World War II, between 1946 and 1964. •Generation X are people born between 1965 and 1976, in the ‘birth dearth’ that followed the baby boom. ▪They spend more money online each month than any other generation. Millennials (Generation Y) are the children of baby boomers, born between 1977 and 2000. ▪They are the first generation to grow up with digital technology •Generation Z are people born after 2000 (although many analysts include people born after 1995) who make up the children’s, tweens’ and teens’ markets. ▪They easily blend online and offline worlds.
Generational marketing •Marketers need to be careful about ‘turning off’ one generation each time they craft a product or message that appeals effectively to another. •Each generation spans decades of time and many socioeconomic levels. •Marketers need to form more precise age-specific segments within each group. •Defining people by their birthdates may be less effective than segmenting them by their lifestyle, life stage or the common values they seek in the products they buy. The changing family •With regards to the family structure, there has been: ▪A rise of single parent families ▪A rise of families with no children ▪A decline in household size ▪An increase in the number of working women
Geographic shifts in population •Young and old alike are moving to urban communities and to larger coastal towns. •At the same time, greater numbers of older people are moving to regional towns and the coast. •There has been a gradual geographic shift of population from rural to metropolitan areas. •The metropolitan areas have a faster pace of living, more commuting, higher incomes and a greater variety of goods and services than can be found in the small towns and rural communities that dot the country. Increasing diversity Each national group has specific wants and different buying habits. Many marketers of food, clothing, furniture and other products have targeted specially designed products and promotions to one or more of these groups.
Economic environment •Economic environment consists of factors that affect consumer purchasing power and spending patterns. Changes in income •Marketers should pay attention to income distribution as well as to income levels. •Over the past several decades, the rich have grown richer, the middle class has shrunk and the poor have remained poor. •This distribution of income has created a tiered market. Companies target markets accordingly.
• Economic environment • Changing consumer spending patterns • Changes in major economic variables, such as income, cost of living, interest rates, and savings and borrowing patterns, have a large impact on the marketplace.
Natural environment •Natural environment designates the natural resources that are needed as inputs by marketers or that are affected by marketing activities. •Marketers should be aware of several trends in the natural environment. •The first involves growing shortages of raw materials. •Air and water may seem to be infinite resources, but some groups see long-term dangers. •A second environmental trend is increased pollution. •Industry will almost always damage the quality of the natural environment. •Consider the disposal of chemical and nuclear wastes; the dangerous mercury levels in the ocean; the quantity of chemical pollutants in the soil and food supply; and the littering of the environment with non- biodegradable bottles, plastics and other packaging materials.
A third trend is increased government intervention in natural resource management. •The governments of different countries vary in their concern and efforts to promote a clean environment. Some, such as the German government, vigorously pursue environmental quality. Others, especially those of many poorer nations, do little about pollution, largely because they lack the needed funds or political will. •Environmental sustainability is concerned with developing strategies and practices that create a world economy that the planet can support indefinitely.
Technological environment •Technological environment designates the forces that create new technologies, creating new products and market opportunities. •The technological environment changes rapidly, creating new markets and opportunities. •However, every new technology replaces an older technology. For example, transistors hurt the vacuum- tube industry, digital photography hurt the film business, and digital downloads and streaming are hurting the CD and DVD businesses. •When old industries fight or ignore new technologies, their businesses decline. Thus, marketers should monitor the technological environment closely. Investment in research and development will be crucial for companies and nations.
Political and social environment •Political environment refers to the laws, government agencies and pressure groups that influence or limit various organisations and individuals in a given society. Legislation regulating business •Even the strongest advocates of free-market economies agree that the system works best with at least some regulation. •Legislation affecting business around the world has increased steadily over the years.
Legislation regulating business •Business legislation has been enacted for a number of reasons. The purposes of government regulations include: ▪Protecting companies from each other ▪Protecting consumers from unfair business practices ▪Protecting the interests of society against unrestrained business behaviour
Increased emphasis on ethics and socially responsible actions •Written regulations cannot possibly cover all potential marketing abuses, and existing laws are often difficult to enforce. •Beyond written laws and regulations, business is also governed by social codes and rules of professional ethics. ‘Socially responsible behaviour’ •Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply ‘do the right thing’. •Almost every aspect of marketing involves ethics and social responsibility issues.
Increased emphasis on ethics and socially responsible actions •The boom in online marketing has created a new set of social and ethical issues. •Critics worry most about online privacy issues. •Much of the information is systematically developed by businesses seeking to learn more about their customers, often without consumers realising they are under the microscope. •Legitimate businesses track consumers’ online browsing and buying behaviour and collect, analyse and share digital data from every move consumers make at their online sites. •Critics are concerned that companies may now know too much and that some companies might use digital data to take unfair advantage of consumers.
Cause- related marketing’ •To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes.
Cultural environment •Cultural environment refers to institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviours. Persistence of cultural values •Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business and government. •Core beliefs and values are relatively resistant to change. •Secondary beliefs and values are more open to change.
• Shifts in secondary cultural values • •Although core values are fairly persistent, cultural swings do take place. • •Consider the impact of popular music groups, movie personalities and other celebrities on young people’s hairstyling and clothing norms. • •Marketers want to predict cultural shifts in order to spot new opportunities or threats. • •The main cultural values of a society are expressed in people’s views of themselves and others, as well as in their views of organisations, society, nature and the universe.
Product
•Product’ refers to the functions and features of a good or service •Should satisfy the needs of the customer •May have a Unique Selling Proposition (USP) •‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding •For example, if the basic need is hunger, no firm manufactures a pill to satisfy the hunger. They identify consumer wants and design a food that will satisfy the hunger (viz. burger, pizza, idly etc.). Hence, the manufacturer or the marketer takes the basic need satisfaction to higher levels by infusing many inputs into the basic product such as taste, features, attractive packaging and price. Most of the times, it includes even manufacturer's corporate image.
Levels of Product core,Basic, expected,Augmented,potential
Product and service classifications • Consumer products • Industrial products • Organisations, persons, places, events, and ideas
Consumer products • Consumer products are products and services bought by final consumers for personal consumption. Marketers usually classify these products and services further based on how consumers go about buying them: ▪ Convenience goods ▪ Shopping goods ▪ Specialty goods ▪ Unsought goods
Industrial products Industrial products are products bought by individuals and organisations for further processing or for use in conducting a business. Three types of industrial product are: ▪ Materials and parts: Raw materials, manufactured materials and parts ▪ Capital items: Installations and accessories ▪ Supplies and services: Operating supplies, repairs and maintenance items
Organisations, persons, places, events, and ideas • Marketers have broadened the concept of a product to include other market offerings: ▪ Organisations: (e.g. commercial and NFP) ▪ Persons: (e.g. celebrities, artists, performers) ▪ Places: (e.g. tourist destinations, heritage sites, parks and gardens) ▪ Events and experiences: (e.g. festivals, cultural/sporting events) ▪ Ideas: (e.g. political marketing, social ideas)
Buyer behaviour: Understanding consumer and business buyers
Learning objectives 1. Identify the consumer market and the main factors that influence consumer buyer behaviour. 2. Identify and discuss the stages in the buyer decision process. 3. Define the business market and identify the main factors that influence business buyer behaviour. 5. List and define the steps in the business buying decision process. Buyer behaviour: Understanding consumer and business buyers
Consumer markets and consumer buyer behaviour • Consumer buyer behaviour refers to the buying behaviour of final consumers – individuals and households – that buy goods and services for personal consumption. • Consumer market refers to all the individuals and households that buy or acquire goods and services for personal consumption.
Consumer markets and consumer buyer behaviour (contd.)
Consumer markets and consumer buyer behaviour (contd.) Slide 75 Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e
Consumer markets and consumer buyer behaviour (contd.) Slide 76 Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e Characteristics affecting consumer behaviour • Culture is the set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important institutions. • Cultural group is a group of people with shared value systems based on common life experiences and situations. • Social classes are relatively permanent and ordered divisions in a society, whose members share similar values, interests and behaviours.
Consumer markets and consumer buyer behaviour (contd.) Social factors • Groups are formed when two or more people interact to accomplish individual or mutual goals. • The following groups have a direct influence on a person’s behaviour:  Membership groups  Reference groups  Aspirational groups  Opinion leaders  Online social networks • Buzz marketing can be used to enlist opinion leaders as brand ambassadors.
Consumer markets and consumer buyer behaviour (contd.) • Marketers are working to harness the power of social networks to promote their products and build closer relationships.
Consumer markets and consumer buyer behaviour (contd.) Personal factors • Demographics include standard population descriptors like:  Age  Economic situation  Life-cycle stage  Education  Occupation • Lifestyle is a person’s pattern of living as expressed in his or her activities, interests and opinions. • Personality refers to the unique psychological characteristics that distinguish a person or group.
Consumer markets and consumer buyer behaviour (contd.) • Brand personality is the specific mix of human traits that may be attributed to a particular brand. • Brand personality traits, identified in selected research, include:  Sincerity: down-to-earth, honest, wholesome and cheerful  Excitement: daring, spirited, imaginative and up-to-date  Competence: reliable, intelligent and successful  Sophistication: upper-class and charming  Ruggedness: outdoorsy and tough
Consumer markets and consumer buyer behaviour (contd.) Slide 81 Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e Psychological factors • Motive (drive) is a need that is sufficiently pressing to direct the person to seek satisfaction of the need. • Perception is the process by which people select, organise and interpret information to form a meaningful picture of the world. • Learning refers to the changes in an individual’s behaviour arising from experience. • Belief is a descriptive thought that a person holds about something. • Attitude refers to a person’s consistently favourable or unfavourable evaluations, feelings and tendencies towards an object or idea.
Consumer markets and consumer buyer behaviour (contd.) • Motivation research refers to qualitative research designed to probe consumer’s hidden, subconscious motivations.
Consumer markets and consumer buyer behaviour (contd.)
The buyer decision process Stages in the buyer decision process Adapted from ‘Figure 5.5 The buyer decision process’, following are the stages and in this order: Need recognition • The buyer recognises a need, triggered by internal or external stimuli. Information search • The buyer seeks out information about products or services with potential to satisfy the need. Evaluation of alternatives • The consumer processes information in order to arrive at brand choices.
The buyer decision process (contd.) Stages in the buyer decision process Purchase decision • The consumer forms a purchase intention and ultimately makes the actual purchase. Post-purchase behaviour • The Following purchase, the consumer will engage in a variety of post-purchase behaviours – including satisfaction, formation of future purchase intentions and loyalty intentions
The buyer decision process (contd.) Slide 86 Roles in the buying process • Five different roles can be identified in most buying processes:  Initiator – The person who first suggests the idea of buying a product or service  Influencer – A person or persons whose views carry some weight in the final purchase decision  Decider – The person who makes the final buying decision, or any part of it (e.g. brand, place of purchase, quantity)  Buyer – The person who makes an actual purchase  User – The person who uses or consumes the product or service
The buyer decision process for new products Slide 87 Stages in the buyer decision process • Consumers go through five stages in the process of adopting a new product:  Awareness  Interest  Evaluation  Trial  Adoption
The buyer decision process for new products (contd.) Slide 88 Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e Influence of product characteristics on rate of adoption • A number of factors influence an innovation’s rate of adoption :  Relative advantage (superiority over existing products)  Compatibility (with consumer’s lifestyle, beliefs and attitudes)  Complexity (ease of understanding)  Divisibility (the ability to undertake limited scale trial)  Communicability (the ability to observe and understand the innovation’s benefits or results)  Other factors (uncertainty, social approval, risks and costs)
Business markets and business buyer behaviour • Business buyer behaviour is the buying behaviour of the organisations that buy goods and services for use in the production of other products and services or to resell or rent them to others at a profit. • In the business buying process, business buyers determine which products and services their organisations need to purchase, and then find, evaluate and choose among alternative suppliers and brands. • Business-to-business (B2B) marketers must do their best to understand business markets and business buyer behaviour. Then, like businesses that sell to final buyers, they must build profitable relationships with business customers by creating superior customer value.
Business markets and business buyer behaviour (contd.) Business markets • The business market is huge. In fact, business markets involve far more dollars and items than do consumer markets. • Business markets can be of two types:  Industrial market where goods and services are purchased for use in the production of other products and services  Reseller market where goods and services are purchased for reselling or renting out at a profit
Business markets and business buyer behaviour (contd.) Business buyer behaviour • At the most basic level, marketers want to know how business buyers will respond to various marketing stimuli.
Business markets and business buyer behaviour (contd.) Main types of buying situations • Straight rebuy is a business buying situation in which the buyer routinely reorders something without any modifications. • Modified rebuy is a business buying situation in which the buyer wants to modify product specifications, prices, terms or suppliers. • New task is a business buying situation in which the buyer purchases a product or service for the first time. • Systems selling (solutions selling) refers to buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation.
Business markets and business buyer behaviour (contd.)
The business buying process
E-procurement: Buying on the internet • E-procurement refers to purchasing through electronic connections between buyers and sellers – usually online. • Companies can do e-procurement by:  Conducting reverse auctions  Engaging in online trading exchanges  Setting up their own company buying sites  Creating extranet links with key suppliers or partners
E-procurement: Buying on the internet (contd.) Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e • B2B e-procurement yields many benefits. It:  Saves transaction costs and results in more efficient • purchasing for both buyers and suppliers  Reduces the time between order and delivery  Eliminates the paperwork associated with traditional requisition and ordering procedures  Helps an organisation keep better track of all purchases  Frees purchasing people from a lot of drudgery and paperwork  Enables purchasing people to focus on more strategic issues, such as finding better supply sources and working with suppliers to reduce costs and develop new products
E-procurement: Buying on the internet (contd.) • The rapidly expanding use of e-procurement also presents some problems.  At the same time that the web makes it possible for suppliers and customers to share business data and even collaborate on product design, it can also erode decades-old customer– supplier relationships.  Many buyers now use the power of the web to pit suppliers against one another and to search out better deals, products and turnaround times on a purchase-by-purchase basis.  E-procurement can also create potential security disasters. Companies are spending millions for research on defensive strategies to keep hackers at bay.
Business-to-business digital and social media marketing • In response to customers’ rapid shift towards online buying, today’s B2B marketers are using a wide range of digital and social media marketing approaches. • Through the wide range of digital and social media marketing approaches, B2B marketers engage customers and manage customer relationships anywhere, any time. • The digital and social media marketing approaches include:  Websites and blogs  Mobile apps  E-newsletters and proprietary online networks  Social media, such as Facebook, LinkedIn, YouTube, Google+ and Twitter
Articles ‘B2B marketing trends’, 2014 (brief article), http://www.chiefmarketer.com/b2b/b2b-marketing-trends-2014-14012014 Buzz marketing examples, http://www.ignitesocialmedia.com/social-media- examples/15-viral-marketing-examples-campaigns-past-5-years Web pages Faith Popcorn’s BrainReserve (trendspotting organisation that uses participant observation research methods to understand the deep motives around buying behaviour and emerging trends), http://www.faithpopcorn.com B2B Marketing, B2B Web Site (dedicated website for B2B professionals featuring research and reports, best practice guidelines, B2B marketing magazine and more), http://www.b2bmarketing.net Suggested resources
Copyright © 2018 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781488611841, Armstrong, Principles of Marketing 7e Slide 34