Understanding Consumer
and Business Markets
Chapter 5
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
The consumer market
 Geographic distribution, frequently divided
into rural, urban, and suburban.
 Demographics, the vital statistics that
describe a population. In particular:
 Age.
 Gender.
 Family life cycle.
 Education.
 Income distribution.
 Ethnicity.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-1
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-2
Family life cycle
 Family life cycle will determine the
purchase behaviour of individuals and
reason for purchase.
 Single parent and two-parent family.
 Young couples no children.
 Family (usually two adults, two young
children).
 Family with teenagers.
 Multi-cultural (or mixed) family.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-3
Situational influences
 Situational influences are the temporary
forces associated with the immediate
purchase environment that affect behaviour
• When consumers buy—the time influence.
(day, week, season).
• Where consumers buy—the place a
decision is made (home, point of
purchase).
• How consumers buy—the way in which
consumers buy (bulk etc).
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-4
SOCIAL AND
GROUP FORCES
Culture
Subculture
Social class
Reference groups
Family and households
PSYCHOLOGICAL
FORCES
Motivation
Perception
Learning
Personality
Attitude
BUYING-DECISION PROCESS
INFORMATION
Commercial
sources
Need recognition
Identification of alternatives
Evaluation of alternatives
Purchase and related decisions
Social sources
SITUATIONAL
FACTORS
When consumers
buy
Where
consumers buy
Post-purchase behaviour
Why consumers
buy
Conditions
under which
consumers buy
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-5
Consumer buying behaviour
influences
 There are five main Buying Behaviour factors
which influence consumer’s decision-making.
 Motivation.
 Perception.
 Learning.
 Personality.
 Self-concept.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-6
Consumer buying behaviour
influences (cont.)
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-7
Four demand characteristics that
differentiate the business market from
the consumer market
 Demand is derived from the demand for the
ultimate consumer products in which the
business product is finally used (e.g. steel).
 In the short run demand is inelastic, that is,
demand for a product responds very little to
changes in price when:
 The cost of a single part or material is a
small portion of the total cost of the finished
product.
 If the part or material has no substitute.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
Copyright © 1997 by The McGraw-Hill Companies, Inc.
5-8
Four demand characteristics that
differentiate the business market from
the consumer market (cont.)
 Demand is widely fluctuating, meaning that
demand for most classes of business goods
fluctuates considerably more than the
demand for consumer products.
 The buyers are well informed and know the
relative merits of alternative sources of
supply and competitive products.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-9
Influences on businessmarket demand
 The number and types of potential
business users.
 Their buying power,
 buying motives,
 and buying habits.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-10
Key differences between
the business market (BM)
and consumer (CM) market
 Small number of BMs.
 BMs have larger purchasing power and buy
in quantity.
 BMs are concentrated. CMs are not.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-11
Key differences between
the business market (BM)
and consumer (CM) market
(cont.)
 Sellers deal direct with business users.
 BMs are usually regionally concentrated.
 BMs can be vertically or horizontally
concentrated.
 BM’s buying motives are rational and
purchase is methodical and objective.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-12
Types of buying situations
1. New task
 New purchase or product category.
 More people involved in new purchase.
 Extensive information must be collected
and evaluated on alternative products.
 Seller displays creative selling ability in
satisfying buyer needs.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-13
Types of buying situations
(cont.)
2. Straight re-buy
 Information needs are minimal
 There is no great consideration of
alternatives.
 Buying decision made in the purchasing
department e.g. purchasing of office
supplies.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-14
Types of buying situations
(cont.)
3. Modified re-buy
 Situation in which the buyer wants to
change (modify) the product specifications,
price, terms, or suppliers.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-15
The buying centre
 A Buying Centre is all the individuals who
play a part in the various buying roles and who
influence buying decisions, determine product
specification and make the buying decision
• Users—people who actually use the good or
service.
• Influencers—people who set the
specifications of, and help determine
aspects of the buying decision because of
their expertise, financial position, or
political power.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-16
Types of buying situations
(cont.)
 Deciders—the people who make the actual
buying decision regarding the product and
supplier.
 Gatekeepers—people who control the flow
of purchasing information within the
organisation, as well as between the firm
and potential vendors.
 Buyers—people who select the suppliers,
arrange the terms of the sale and process
the actual purchase orders.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-17
Buying patterns of
business users








Direct purchase.
Frequency of purchases.
Size of order.
Length of negotiated period.
Reciprocity arrangements.
Service expectations.
Dependability of supply.
Leasing instead of buying.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
5-18