MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

Lecture Objectives
1.

MARK1012
Lecture 4
Strategy
Marketing
Environment

Introduction to
Marketing

Marketing
Research

Consumer
and
Business
Market

Providing a basic understanding of consumer and

business market behaviour.
a.
b.
c.

Segmentation
And Targeting

2.
3.

Illustrate different types of buying decision behaviour.

Explain the basics of the buyer decision process for
new products.
a.

Mohammed A Razzaque

4.

Outline the major characteristics affecting behaviour in

these markets, and list factors that influence them.
Explain the buying decision process in these markets and
compare and contrast them .
Identify and define the various consumer buying roles.

Identify stages in the adoption process

Identify the differences between business markets,

institutional markets and government markets.

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How consumers make their choices among products depends on the following factors

AModelofConsumerBuyingBehaviour
The consumer market

EXTERNAL
INFLUENCE

All the individuals and households who buy or acquire goods and services
for personal consumption.

Cultural
Culture
Subculture
Social Class
Marketing programs
Marketing objectives
Marketing strategy
Marketing mix

Social
Household type
Reference groups
Roles & status

Consumer
BUYER DECISION
PROCESS
Lifestyle

Buyers responses
oProduct service & category selection
oBrand selection
oReseller selection
oPurchase timing & repurchase intervals
oPurchase amount
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Psychological
Motivation
Perception
Learning (memory)
Beliefs & attitudes
Personality &
self-concept
Environmental
influences
Economic
Technological
Political
INTERNAL
CHARACTERISTICS

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CULTURAL FACTORS

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SOCIAL FACTORS

CulturereferstoThesetofbasicvalues,perceptions,

Social factors, such as the consumer's household

wantsandbehaviourslearnedbyamemberofsociety
fromfamilyandotherimportantinstitutions.

type and reference groups, as well as social roles

and status influences buying decisions

Amajorinfluenceonourwantsandgeneralbehaviour.
Marketersneedtoidentifyculturalshifts,ortrends,thatmay
impactondemandfortheirproductsandservices.

companies must take them into account when designing

their marketing strategies.

Groups
Membership groups.
Reference groups.
Opinion leaders

Examples:thetrendtowardhealthierlifestyles,andincreasing
concernforenvironmentalissues.

Personal
Age & lifecycle stage
Occupation
Education
Economic situation

Globalmarketersmustadapttothecultureanddevelop
marketingstrategyaccordingly.

Roles and Status

Culturalgroups>>Subcultures
Socialclass>>Relativelypermanentandordered

divisionsofsociety ahierarchyofsorts.
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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

PERSONAL FACTORS I

Social and group forces are the most basic influence on a

person's values, priorities, and beliefs.
1.

Subculture

Social class
determined by a
combination of
occupation, income,
education,
wealth and other
variables.

Social and group

forces

2.

distinct groups within

the larger culture that
have identifiable patterns
of behaviour.

Family and
households

Reference
groups

3.

Family of orientation
(parents), renting units
(associational groups)
and family of procreation
(spouse and children)
are the most basic
reference groups.

4.

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Age and LifeCycle Stage Changes in buyers age and

family structure over time affect their choices.
Occupation Carries with it distinct consumptive
needs and their own subcultural norms and values
that influence buyer behaviour.
White collar workers need different clothes than blue collar
workers.

Economic Situation For almost everyone, buying

behaviour is determined by financial means.
Education People with higher education levels tend
to hold positions that influence dress standards and
such purchases as computers and reading materials.
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PERSONAL FACTORS II

PERSONAL FACTORS III

Personalityandselfconcept: Theuniquepsychological

5. Consumer lifestyle: A persons pattern of living as

expressed in his/her activities, interests and opinions.

characteristicsthatleadtorelativelyconsistentandlasting
responsestoourenvironment.Selfconceptisonesselfimage:

PsychographicsThetechniqueofmeasuringlifestylesand

Complex;closelytiedtomotivation:usuallydescribedintermsofself

developinglifestyleclassifications;itinvolvesmeasuringthe
majorAIO dimensions(Activities,Interests,Opinions).

confidence,dominance,sociability,autonomy,defensiveness,adaptability
andaggressiveness.
Usefulforanalysingconsumerbehaviour:hasbeenappliedtobrands
peoplehaveatendencytogiveproductsandbrandshumancharacteristics
(Fivebrandpersonalitytraits:sincerity,excitement,competence,
sophisticationandruggedness).
Consumersaremorelikelytochoosebrandswithpersonalitiesthatmatch
theirown.TheImaMacadspersonifyingthebrandwithahuman
characterillustrateApplesstrategytoassignthepersonalitytraitsof

Lifestylecapturessomethingmorethanjustsocialclassor

personality.Itprofilesapersonswholepatternofacting
andinteractingintheworld.
InAustralia,theRoyMorganResearchCentreconducts

researchintoconsumeropinionsandtrends.Whenused
carefully,thelifestyleconceptcanhelpthemarketerto
understandchangingconsumervaluesandhowtheyaffect
buyingbehaviour.

coolnessandyouthfulnesstotheMac.
Inordertounderstandconsumerbehaviourthemarketermustfirst

understandtherelationshipbetweenselfconceptandpossessions.
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PSYCHOLOGICAL FACTORS I: MOTIVATION

PSYCHOLOGICAL FACTORS
Motivation
Perception
Learning
Beliefs and

Attitudes

The internal urge directing a person to do

something to satisfy that urge

Motivation
Maslow's Theory
of Motivation
discusses
motivation.

When buying something we ask

Why?
What am I really seeking?
What needs am I trying to satisfy?

A person has many needs at any given

time.

Motivation Theories

Sigmund Freud: people are largely unconscious about the real

psychological forces shaping their behaviour.
Abraham Maslow sought to explain why people are driven by
particular needs at particular times and developed the need
hierarchy.

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Need states
vary in their
intensity or
motivation.

Self
Actualization

Self-Esteem

Belongingness

Safety

Physiological

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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

PSYCHOLOGICAL FACTORS III: BELIEFS AND ATTITUDES

PSYCHOLOGICAL FACTORS II:

PERCEPTION & LAERNING

Perception :Theprocessbywhich
peopleselect,organiseand
interpretinformationtoforma
meaningfulpictureoftheworld.

Ouractionsareinfluencedbyour
perceptionofthesituation.

PerceptualProcesses

SelectiveAttention:exposedto
many,rememberafew
SelectiveDistortion:interpretto
supportviewsheld
SelectiveRetention:remember
thingstosupportattitudesand
beliefs

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Beliefs refer to the assumptions and convictions that are held to be true, by

Learning refersto
changesinbehaviour
arisingfromexperience.
Learningtheoryhelps
marketersbuilddemand
byassociatingaproduct
withdrives (strong

an individual or a group, regarding concepts, events, people, and things. A

belief is an internal feeling that something is true, even though that belief
may be unproven or irrational.
I believe that walking under a ladder brings bad luck, or
I believe that there is life after death.

internalstimulusthatcalls
foraction),using
motivatingcues (minor
stimulideterminingwhen,
whereandhowone
responds) andproviding

Incorrect beliefs about product or brand image can block sales.

An attitude refers to the predisposition or a tendency to respond positively

or negatively towards a certain idea, object, person, or situation . An attitude
is the way a person expresses or applies their beliefs and values, and is
expressed through words and behaviour.

positivereinforcement.

I get really upset when I hear about cruelty to children and animals, or

I hate school.

People acquire their beliefs and attitudes through acting and learning.
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TRICOMPONENT ATTITUDE MODEL

Cognitive
Beliefs and
attitudes not
influenced by
emotion.

Affective
Emotional
responses such
as liking or
disliking.

Conative
Intention to
purchase or
purchase itself.

ATTITUDE

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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

Consumer Decision Making Process

Various Factors and Consumer Decision Making Process

EXTERNALINFLUENCES

Experiences
and
Acquisitions

Culture
Subculture
Demographics
Social Status
Reference Groups
Family
Marketing Activities

Need
recognition

SITUATIONS
Problem Recognition

Information
search

Information Search

SELF CONCEPT Desires

And
LIFESTYLE Needs

INTERNAL INFLUENCES
Perception
Learning
Memory
Motives
Personality
Attitudes

Experiences
and
Acquisitions

Problems are recognised when people sense a difference

between an actual state and some desired state.

Alternative Evaluation
and Selection

Evaluation of
alternatives

Outlet Selection and

Purchase
Postpurchase
Dissonance

Involves comparing the expected

performance of the product against the
perceived performance received. Results
in cognitive dissonance .

Postpurchase
behavior
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Step 2 : Information Search

Step 1: Need Recognition

Personal
Sources

Need Recognition
Difference between actual state and desired state

Commercial
Sources

External Stimuli
TV Advertising
Print Ad
Radio Ad
Internet
Stimuli from Environment

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involves deciding
to buy or not to buy.

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Hunger
Thirst
A persons normal needs

compares product attributes of the

alternatives against degrees of
importance each attribute has in
meeting needs, beliefs about the product.

Purchase
decision

SITUATIONS

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Internal Stimuli

effort varies from heightened awareness corresponding

to increased receptivity for relevant information to
active information search modes where the person
expends some energy to obtain.

Public
Sources
Experiential
Sources

Family, Friends, Neighbours

Most Influential sources of information
Advertising, Salespeople,
Mass media
Consumer rating groups
Examining/Handling the product
Using the product

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Step 3: Evaluation of Alternatives

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Step 4: Purchase Decision

Product Attributes

Purchase Intentions
Desire to buy the most preferred brand

Evaluation of Quality, Features and price

Degree of Importance
Which of the attributes is the most important?

Attitude of others

Brand Beliefs
What is the belief about each of the available brands?

Unexpected
situational factors

Total Product Satisfaction

Purchase Decision

Given the expectations about the products, what is the

likely degree/extent of satisfaction?

Evaluation Procedure
Choosing a brand based on one or more of the
attributes
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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

Step 5: Postpurchase Behaviour

Post-purchase behaviour: Cognitive Dissonance

Consumers Expectation of Products

Performance

Products Perceived Performance

Satisfied Customer

Dissatisfied Customer

Cognitive Dissonance
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Types of Consumer Buying Decisions

Consumer Buying Roles

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Roles and Status - each

Consumer Buying Roles

relationship of a person with

his or her group carries with
it certain roles and status
carrying consumptive
responsibilities.

User

People play several roles initiator; influencer; decider;

buyer;and user in the buying
process at any time.

Buyer

Initiator

Key
Family
Decision
Roles

Routine Response
Behavior
Little involvement in
selection process
Frequently purchased
low cost goods
May stick with
one brand
Buy first/evaluate later
Quick decision

e.g. Softdrink,
ballpoint pen,
petrol,

Influencer

Decider

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Low levels of
involvement
Low to moderate
cost goods
Evaluation of a few
alternative brands
Short to moderate time
to decide
e.g. clothing

Extensive Decision
Making

High levels of involvement

High cost goods
Evaluation of many brands
Long time to decide
May experience cognitive
dissonance

Less
Involvement
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Kotler Brown Adam Armstrong

Limited Decision
Making

House, car, camera,

some clothing,
choice of accountant
or doctor.

More
Involvement
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Marketing 5 th Ed Copyright 2001 Pearson Educatio n Australia

The buyer decision process for new products

Stages in the adoption process

The Buyer Decision Process for New Products

A new product is a good, service or idea that is

perceived by some potential customers as new.

Trial

There are five Stages in the Adoption Process

Adoption

Evaluation

Awareness; Interest; Evaluation; Trial; Adoption

Interest

Individual Differences in Innovativeness

Awareness

People differ greatly in their readiness to try new

products.
Some are Innovators of the new technology, some
are early adopters, some early majority, some late
majority and some are laggards.
Copyright 2012 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781442531109/Kotler/POM/5e
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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

BUSINESSTOBUSINESS MARKETS

Influence of Product Characteristics on Rate of Adoption

Relative Advantage:

Business markets are all the organisations that buy goods and services to use in
the production of other products and services or for the purpose of renting them
to others at a profit.

the degree to which an innovation

appears superior to existing products

Types of Business Markets

Compatibility:

the degree to which the innovation fits the

values and experiences of potential
consumers.

Complexity:

the degree to which the innovation is

difficult to understand or use.

Divisibility: :

the degree to which the innovation may

be tried on a limited basis.

Communicability:

the degree to which the results of using

the innovation can be observed or
described to others.

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The industrial market. Those who buy to make

other products and services that are sold,
rented or supplied to others.
The reseller market. Those who acquire goods
for the purpose of reselling or renting them
to others at a profit.
The institutional and government market.
Government units - federal, state and local that purchase or rent goods and services for
carrying out the functions of government.

Other
Character
istics

Character
istics of
Business
Markets

Nature of
Buying
Unit

Types of Decisions
and Decision Process

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A Model of Business Buying Behaviour

Characteristics of Business Markets

In some ways business markets are similar to consumer markets. Both involve
people who assume buying roles and make purchase decisions to satisfy needs.
However, business markets also differ in many ways from consumer markets.

Market Structure and Demand

1. Fewer buyers
2. Larger Buyers
3. Close supplier-customer
relationships
4. Geographically
concentrated buyers
5. Derived demand
6. Inelastic demand
7. Fluctuating demand

Market Structure
and Demand

The Environment

Nature of buying unit

1.
2.

Professional purchasing
Several buying influences

The Buying Organisation

The Buying Centre
Buying
Decision
Process

Types of Decisions and

Decision Processes
1.

More complex and

formalised decisions

2.

Direct purchasing
Reciprocity
Lease

3.
4.

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Buyers Response
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A Model of Business Buying Behaviour

Source:Kotler, Brown, Adam, Armstrong;

Marketing, 5th Edition; Prentice Hall

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BUSINESS BUYER BEHAVIOUR I

Major Types of Buying Situations
Straight Rebuy. The buyer reorders

something without any modifications.

Modified Rebuy. The buyer seeks a

change in specifications, prices, terms, or

suppliers.
New Task. Here the company is buying
the product for the first time and faces
the greater costs and risks.

Straight
Rebuy

Types of
Business
Buying
Situations

Modified
Rebuy

New Task
Buying

Systems buying and selling.

The buyer seeks a packaged solution to a problem from a single seller who offers
a set of interlocking products and the coordination, implementation, and control
procedures for operating them.
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MARK1012: Marketing Fundamentals Lecture 4: MOHAMMED RAZZAQUE

BUSINESS BUYER BEHAVIOUR II

Types of Buying Situations

Participants in the business buying process

Users are members of the organisation
who will use the product.
Users
Influencers
are people who affect the
Gatekeepers
buying decision.
Buyers are those with the formal
authority to select suppliers and to
Buying Centre
arrange terms of purchase.
Deciders
Influencers
Deciders have the formal or informal
power to select or approve the final
suppliers.
Buyers
Gatekeepers are those who control the
flow of information to others.
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Major influences on Business Buying

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Stages in Business Buying Process I

Problem Recognition
General Need Description
Product Specification

Proposal Solicitation

Supplier Search

Supplier Selection
Order Routine Specification
Performance Review

Source:Kotler, Brown, Adam, Armstrong;

Marketing, 5th Edition; Prentice Hall
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STAGES IN BUSINESS BUYING PROCESS II

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Comparison of Business & Consumer Buying Situations

Problem Recognition can result from internal or external stimuli; [emerge from
an identified shortage or ideas for improvements recognised by buyers
General Need Description describes the overall characteristics and quantities of
the needed item.
Product Specification requires that a team must translate general needs into
product specifications. An engineering value analysis team may look at
alternative designs to reduce production costs.
Supplier Search conducts a search for the best vendors meeting specifications.
Proposal Solicitation invites qualified suppliers to submit proposals covering the
terms of supply and support.

INDUSTRIAL

CONSUMER

1 Need or problem recognition

2 General need description
3 Product specification

Anticipates
Extensive
Precise / technical

Reacts
Limited
Benefits

4 Information / supplier search

5 Proposal solicitation

Extensive
Formal
Extensive

Limited
Verbal
Limited analysis

Calculated re-order
Extensive comparisons
and benchmarking

Not routinised
Little comparison

6 Supplier selection

Supplier Selection selects suppliers based upon a combination of technical

competence and service record and reputation.

7 Order-routine specification

OrderRoutine Specification specifies the details of the supplier's contract listing

technical specifications, delivery terms, policies for return and warranties,
and quantities needed.

8 Post-purchase performance
review

Performance Review will review how the supplier contract is working for the
company and may continue, amend, or drop the seller.
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BUYING STEP

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