Lecture 3
Introduction to Marketing
Theocharis Katranis
Fall Semester 2014
Introduction to Marketing
1
Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Today’s Lecture
1. We will define the consumer market and construct a
simple model of a consumer buyer behaviour.
2. We will name the four major factors that influence
consumer buyer behaviour.
3. We will list and define the major types of buying
decision behaviour and the stages in the buyer decision
process.
4. We will describe the adoption and diffusion process for
new products.
Introduction to Marketing
Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Today’s Lecture
5. We will define the business market and explain how
business markets differ from consumer markets.
6. We will identify the major factors that influence
business buyer behaviour.
7.
We will compare the institutional and government
markets and explain how institutional and government
buyers make their buying decisions.
Introduction to Marketing
Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Consumer Markets and
Consumer Buyer Behavior
1. Consumer Markets
Consumer Markets are all the individuals
and households who buy or acquire goods
and services for personal consumption.
2. Consumer Buyer Behavior
It is the buying behavior of final consumers –
individuals and households that buy goods
and services for personal consumption.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Model of Consumer Behavior
The Environment
Marketing Stimuli
Buyer’s black box
1. Product
1. Economic
2. Price
2. Technological
3. Place
3. Social
4. Promotion
4. Cultural
Introduction to Marketing
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Other
1. Buyer’s Characteristics
2. Buyer’s Decision Process
Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Buyer Responses
1. Buying attitudes and preferences
2. Purchase Behavior: what the buyer buys,
when, where, and how much.
3. Brand and company relationship behavior
Introduction to Marketing
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Characteristics Affecting
Consumer Behavior
1. Culture
It is the Set of Basic Values, Perceptions,
wants, and behaviors learned by a member of
society from family and other important
institutions.
Introduction to Marketing
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Characteristics Affecting
Consumer Behavior
2. Social Factors
2.1 Consumer’s Small Groups
2.2 Family
2.3 Social Roles
2.4 Social Status
Introduction to Marketing
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Characteristics Affecting
Consumer Behavior
3. Personal Factors – Characteristics
3.1 Buyer’s Age and Life-cycle stage
3.2 Occupation
3.3 Economic Situation
3.4 Lifestyle
3.5 Personality
3.6 Self-concept
Introduction to Marketing
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Characteristics Affecting
Consumer Behavior
4. Psychological Factors
4.1 Motivation
4.2 Perception
4.3 Learning
4.4 Beliefs
4.5 Attitudes
Introduction to Marketing
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
Maslow’s Hierarchy of Needs
Self-actualization Needs
(Self-development and Realization)
Esteem Needs
(Self-esteem, Recognition, status)
Social Needs
(Sense of Belonging, Love)
Safety Needs
(Security,
Protection)
Physiological Needs
(Hunger, Thirst)
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Theocharis Katranis, MBA,
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
Need
Recognition
Introduction to Marketing
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Information
Search
Evaluation of
Alternatives
Theocharis Katranis, MBA
Purchase
Decision
Post-Purchase
Behavior
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
1. Need Recognition
It is the First Stage of the Buyer Decision
process, in which the consumer recognizes a
problem or need.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
2. Information Search
It is the stage of the Buyer decision process
in which the consumer is aroused to search
for more information; the consumer may
simply have heightened attention or may go
into an active information search.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
3. Evaluation of Alternatives
It is the stage of the Buyer Decision process
in which the consumer uses information to
evaluate alternative brands in the choice set.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
4. Purchase Decision
It is the Buyer’s Decision about which
brand to purchase.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
5. Post-purchase Behavior
It is the stage of the Buyer Decision process
in which the consumers take further action
after purchase, based on their satisfaction or
dissatisfaction.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
New Product Definition
It is any Product, Service, or Idea that is
perceived by some potential customers as new.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
The Adoption Process
It is the Mental Process through which an
individual passes from first hearing about an
innovation to final adoption i.e. buying the new
Product.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
The 5 Stages in the Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
1. Awareness
The consumer becomes aware of the new
product, but lacks information about it.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
2. Interest
The consumer seeks information about the new
product.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
3. Evaluation
The consumer considers whether trying the
new product makes sense.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
4. Trial
The consumer tries the new product on a
small scale to improve his or her estimate of
its value.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Buyer’s Decision Process
for NEW PRODUCTS
5. Adoption
The consumer decides to make full and
regular use of the new product.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Beliefs and Attitudes
Marketers must be able to recognize and
understand the beliefs and attitudes of their target
consumer markets.
By succeeding that, marketers will be able to
create the correct Marketing Mix and Plan giving
to their consumers the needed value and
satisfaction.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Consumer Behavior Across
International Borders
Consumers may behave and react differently
from country to country. This is due to
consumers’ values, perceptions, beliefs and
country Legislation.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Business Buyer Behavior and
Business Markets
1. Business Buyer Behavior
It is the buying behavior of the organizations
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.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Business Buyer Behavior and
Business Markets
2. Business Markets
“Suppliers”
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Business Buyer Behavior and
Business Markets
The Business buying process
It is the decision process by which business
buyers determine which products and services
their organizations need to purchase, and then
find, evaluate, and choose among alternative
suppliers and brands
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Market Structure and Demand
1. Business Markets contain fewer but larger buyers
2. Business buyer demand is derived from final consumer
demand
3. Demand in many business markets is more inelastic –
not affected as much in the short run by price changes
4. Demand in business markets fluctuates more and more
quickly
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Nature of Buying Unit
1. Business purchases involve more buyers.
2. Business buying involves a more professional
purchasing effort.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Types of Decisions and the
Decision Process
1. Business Buyers usually face more complex
buying Decisions.
2. The Business buying process is more formalized.
3. In Business buying, buyers and sellers work
more closely together and build close long-term
relationships.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Types of Buying
Situations
1. Straight rebuy
2. Modified rebuy
3. New Task
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Types of Buying
Situations
1. Straight rebuy
It is a business buying situation in which the
buyer routinely reorders something without
any modifications.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Types of Buying
Situations
2. Modified rebuy
It is a business buying situation in which
the buyer wants to modify product
specifications, prices, terms or suppliers.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Types of Buying
Situations
3. New Task
It is a business buying situation in which the
buyer purchases a product or service for the
first time.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
1. Users
2. Influencers
3. Buyers
4. Deciders
5. Gatekeepers
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
1. Users
Members of the buying organization who
will actually use the purchased product or
service.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
2. Influencers
People in an organization’s buying center who
affect the buying decision; they often help
define specifications and also provide
information for evaluating alternatives.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
3. Buyers
The people in the organization’s buying center
who make an actual purchase.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
4. Deciders
People in the organization’s buying center
who have formal or informal power to select
or approve the final suppliers.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Participants in the Business
Buying Process
5. Gatekeepers
People in the organization’s buying center who
control the flow of information to others.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Influences on
Business Buyers
1. Environmental Factors
2. Organizational Factors
3. Interpersonal Factors
4. Individual Factors
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Influences on
Business Buyers
1. Environmental Factors
- Current and Expected Economic Environment
- Shortages in Key Materials
- Technological/Political/Competitive Developments
- Culture and Customs
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Influences on
Business Buyers
2. Organizational Factors
- Company’s Objectives
- Policies
- Procedures
- Structure
- Systems
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Influences on
Business Buyers
3. Interpersonal Factors
People within the organization who can
influence other people within the different
departments.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Major Influences on
Business Buyers
4. Individual Factors
- Personal Motives / Perception / Preferences
- Personal Characteristics : Age / Income /
Education / Professional Identification /
Personality / Attitudes toward risk
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 1 : Problem Recognition
Stage 2 : General Need Description
Stage 3 : Product Specification
Stage 4 : Supplier Search
Stage 5 : Proposal Solicitation
Stage 6 : Supplier Selection
Stage 7 : Order-routine specification
Stage 8 : Performance Review
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 1 : Problem Recognition
It is the first stage of the business buying process
in which someone in the company recognizes a
problem or need that can be met by acquiring a
good or a service.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 2 : General Need Description
It is the stage in the business buying process in
which the company describes the general
characteristics and quantity of a needed item.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 3 : Product Specification
It is the stage in the business buying process in
which the buying organization decides on and
specifies
the
best
technical
product
characteristics for a needed item.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 4 : Supplier Search
It is the stage in the business buying process in
which the buyer tries to find the best vendors.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 5 : Proposal Solicitation
It is the stage in the business buying process in
which the buyer invites qualified suppliers to
submit proposals.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 6 : Supplier Selection
It is the stage in the business buying process in
which the buyer reviews proposals and selects a
supplier or suppliers.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 7 : Order-routine specification
It is the stage in the business buying process in
which the buyer writes the final order with the
chosen supplier(s), listing the technical
specifications, quantity needed, expected time of
delivery, return policies, and warranties.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
The Business Buying
Process – (8 Stages)
Stage 8 : Performance Review
It is the stage in the business buying process in
which the buyer assesses the performance of the
supplier and decides to continue, modify, or drop
the arrangement.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
E-procurement:
Buying on the Internet
It is the purchasing through electronic
connections between buyers and sellers –
usually online.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
E-procurement:
Buying on the Internet
Companies can do e-procurement with the
following 4 ways:
1. Reverse Auctions – The company Invite
Suppliers to Bid
2. Online Trading Exchanges
3. Company Buying Sites
4. Extranet Links With Key Suppliers
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Benefits of E-procurement
1. It shaves transaction costs and results in more
efficient purchasing for both buyers and
suppliers.
2. It reduces the time between order and delivery
3. It reduces drudgery and paperwork
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Weakness of E-procurement
There is always the possibility for hackers to
brake into the security system of any company
and manipulate/steal data and information for
their own or other people’s benefit.
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Institutional and Government
Markets
Institutional Markets are Schools, Hospitals, Nursing
homes, Prisons and other institutions that provide goods
and services to people in their care.
Usually they have LOW Budgets.
Government Markets are Governmental Units (i.e national,
regional and local) that purchase or rent goods and services
for carrying out the main functions of government
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Government Markets Characteristics
1. Government Organizations typically require
suppliers to submit bids and normally they award
the contract to the lowest bidder.
2.
Government Organizations tend to favor
domestic suppliers over foreign suppliers.
3.
Government Buyers are affected by
Environmental, Organizational, Interpersonal and
Individual Factors.
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Summary - Lecture 3
1. We defined the consumer market and constructed a
simple model of a consumer buyer behaviour.
2. We named the four major factors that influence
consumer buyer behaviour.
3. We listed and defined the major types of buying
decision behaviour and the stages in the buyer decision
process.
4. We described the adoption and diffusion process for
new products.
Introduction to Marketing
Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Summary - Lecture 3
5. We defined the business market and explain how
business markets differ from consumer markets.
6. We identified the major factors that influence business
buyer behaviour.
7. We compared the institutional and government markets
and explained how institutional and government
buyers make their buying decisions.
Introduction to Marketing
Theocharis Katranis, MBA
Fall Semester 2014
Lecture 3
Chapters 5 and 6
END of Lecture 3
Thank you for your attention
Introduction to Marketing
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Theocharis Katranis, MBA
Fall Semester 2014