DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY

MEXICO CAMPUS
San Juan Mexico, Pampanga

Written Report in Marketing Management

Chapter 7
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Chapter 8
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Chapter 9
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Submitted to:

Mr. Paul Jaybee

Marketing Management Instructor

Submitted by:
RCBoy V. Cativo (Group Leader)
Jubileen A. Canales
Marielle V. Castillo
Angelica C. David
Jeric Ian L. David

Course, Year & Section:

BSBA- 1B
Chapter 7
Major factors influencing buying behavior
Cultural factors
Culture
Culture is the sum total of learned beliefs, values, and customs that serves to
direct the consumer behavior of members of a particular society.
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DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Subculture
A subdivision of a national culture that is based on some unifying characteristic.
Gender, religion, racial group, status, age and etc.
Social class
Virtually all human societies exhibit social stratification. Stratification sometimes
takes the form of a caste system.
Homogeneous and enduring divisions in a society.
Upper class– are the social elite who live on inherited wealth and have well-
known families
Middle class – are the average white and blue collar job/workers who live on “the
better side town” and try to be “do the proper things.”
Lower class– are on welfare, visibly poverty stricken and usually out of work of
have “the dirties”
Social factors
Reference groups
Consist of all the groups that have a direct or indirect influence on the person’s
attitude or behavior.
Family
The most influential primary group;
Family of orientation – acquires the orientation towards their religion, politics,
and economics.
Family of procreation – consists of husband, wife, and children.
Roles and statuses
Person participants in many groups throughout life – family, clubs and
organization. The person’s position in each group can be defined in terms of role
and status.
Personal factors
Age and life-cycle stage
People buy different goods and services over their lifetime. All the things they
buy are also age related.
Occupation
White-collar job and Blue-collar job.
Life style
People coming from the same subculture, social class and occupation may lead to
quite different life-style.
Personality and self-concept
Personality is usually described in terms of such traits as self-confidence,
dominance, autonomy, deference, sociability, defensiveness and adaptability.
Psychological factors
Motivation
Biogenic states of tension such as hunger or thirst and discomfort.
Psychogenic stages of tension such as needs for recognition, esteem or belonging.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Freud’s Theory of Motivation – posits that unconscious psychological forces such

as desires and emotions shape an individual’s behavior. Using of some senses like
sense of touch, smell, and taste.
Maslow’s Theory of Motivation – hierarchy of needs.
Herzberg’s Theory of Motivation – two type of motivation
Motivational factor – yield positive satisfaction.
Hygiene factor – do not yield positive satisfaction.
Perception
Defines as the process by which an individual selects, organizes and interprets
information inputs to create meaningful pictures of the world.
Selective attention – means that marketers have to work hard to attract consumer
attention.
Selective distortion – describes the tendency of people to twist in formation into
his/her existing mind-set.
Selective retention – people will forget much that they learn. They will tend to
retain information that supports their attitudes and beliefs.
Learning
Describes changes in an individual’s behavior arising from experiences.
Belief and attitudes
Through doing and learning, people acquire beliefs and attitudes. These in turn
influence their buying behavior.
Types of Buying Behavior
High involvement
Complex buying behavior
Highly involved in a purchase and aware of significant differences among brands.
Dissonance-reducing buying behavior
Sometimes the consumer is highly involved in a purchase but sees little difference
in the brands.
Low involvement
Habitual buying behavior
Many products are bought under conditions of low consumer involvement and the
absence of significant brand differences.
Variety-seeking buying behavior
Some buying situations are characterized by low consumer involvement but
significant brand differences.

Stage in the buying decision process

Need recognition
The buying process starts when the buyer recognizes a problem or need.
Information search
Personal sources, commercial sources, public sources and experiential sources.
Evaluation of alternatives
Consumers process the competitive brand information and make a final judgment
of value.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Purchase decision
Is also influenced by unanticipated situational factors. The consumer forms a
purchase intention on the basis of such factors as expected family income,
expected price, and expected product benefits.
Post purchase behavior
After purchasing a product, the consumer will experience some level of
satisfaction or dissatisfaction.
Post purchase satisfaction – some buyers will not want the flawed product, other
will be indifferent to the flaw, and some may even see the flaw as enhancing the
value of the product.
Post purchase actions – the consumer’s satisfaction or dissatisfaction with the
product will influence subsequent behavior. If consumer satisfied he or she will
exhibit a higher probability of purchasing the product again.
Post purchase – marketers should also monitor how the buyers use and dispose of
the products.
If the consumer find new uses of the product it will help the marketers to
advertise it again with the other uses.
If the product store in cabinet it indicate that the product is not very satisfying and
the word-of-moth is not strong.

Chapter 8
"Analyzing Business Markets and Business Buying Behavior"
Who Is in the Business Market?
The business market consists of all organizations that acquire good and services to use
in the production of other products or services that are sold, rented, or supplied to
others.
• Fewer Buyers- The business marketer normally deals with far fewer buyers
than does the consumer market.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

• Larger Buyers- Many business market are characterized by a high buyer

concentration ratio: a few large buyers do most of the purchasing
• Close supplier Customer Relationship- Because of the smaller customer base.
And the importance and power of the larger customers, we observe close
relationships between customers and suppliers in business markets.
• Derived Demand- The demand for business goods is ultimately derived from
demand for consumer goods.
• Inelastic Demand- The total demand for business goods and services is not
much affected by price changes.
• Fluctuating Demand- The demand for business goods and services tend to be
volatile than the demand for consumer goods and services. This sales volatility
has led many business marketers to diversify their products and markets to
achieve more balanced sale.
• Professional Purchasing- Business goods are purchased by trained purchasing
agents, who spend their professional lives learning how to buy better. This
means that business marketers have to provide and master greater technical
data about their product and competitors’ products.
• Several Buying Influences- Business marketers have to send well- trained sales
representatives and often sales team to deal with the well -trained buyers.

Characteristic of Business Buying

Direct Purchasing- Business buyers often buy directly from manufacturers rather
than through middlemen
Reciprocity- Business buyers often select suppliers who also buy from them.
Leasing- Many industrial buyers lease their equipment instead of buying it.

What Buying Decisions Do Business Buyers Make?

Straight Re-buy- The straight re-buy describes a buying situation where the
purchasing department reorders on a routine basis.
Modified Re-buy- The modified re-buy describes a situation where the buyer
wants to modify product specifications, prices, delivery requirements, or other
terms.
New Task- Is business buying situation in which the buyer purchases a product or
a service for the first time.

System Buying and Selling

System Selling- Selling a complete solution to a problem or need rather than a
number of component parts.
System Buying- Buying a complete solution to a problem or need rather than a
number of component parts.

Who Participates in the Business Buying Process?

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Seven roles in the purchase decision process:

Initiators- request that something be purchased.
Users- will use the product or service.
Influencers- people who influence the buying decision, often by helping define
specifications and providing information for evaluating alternatives.
Deciders- people who decide on product requirements or on suppliers.
Approves- authorize the proposed actions of deciders or buyers.
Buyers- people who have formal authority to select the supplier and arrange the
purchase terms.
Gatekeepers- people who have the power to prevent sellers or information from
reaching members of the buying center.

What are the Major Influences on Business Buying?

Environmental Factors Business Buyers are heavily influenced by factors in the
current and expected economic environment, such as the level of primary
demand, the economic outlook and the cost of money.
Organizational Factors
Business Marketers should be aware of the following organizational trends in
the purchasing area.
•Purchasing department upgrading- commonly occupy a low position in
the management hierarchy, in spite of managing often more than half of
the company's costs.
•Centralized purchasing- most purchasing is carried out by separate
divisions because of their differing needs. Recently, companies have
started to recentralize some of the purchasing.
•Long term contracts- Business buyers are increasingly initiating or
accepting long-term contracts with reliable suppliers.
•Purchasing-performance evaluated- more companies are setting up
incentive systems to reward purchasing managers for good buying
performance, in much the same way that sales personnel receive
bonuses for good selling performance.

Interpersonal Factors- The buying center usually includes several participants

with differing interest, authority, and persuasiveness that influence each other.

Individual Factors- Each participant in the buying process has personal

motivations, perceptions, and preferences. These are influenced by the age,
income, education, personal identification, culture, their job status, personality,
and attitudes towards risk. All buyers have different buying style.

Global Marketing

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Adapting to Asian Business Styles - International business success requires that

the marketer
Understand and adapt to the local business culture and norms.

Rules of Social and Business Etiquette

Managers should understand when doing business in some Asian countries.
China- giving "face" or esteem in other people's eyes is important to the Chinese
Hong Kong- Feng shui or geomancy is important to Hong Kong businessmen.
Some knowledge of feng shui such as negotiating for a business related feature
helps in closing business deals.
India- They greet with the hands folded namaste. Any belittling of their country
or culture, or outward display of arrogance condescension is likely to alienate
your Indian hosts and possibly terminate the relationship.
Japan- Do not imitates Japanese bowing customs unless you understand them.
Malaysia- Malaysians are easy going, relaxed, and informal.Politeness is very
important in all social and business interactions.
Philippines- Pakikisama or a sense of camaraderie, consideration, and sensitivity
is important for a successful business relationship.
South Korea in South Korea drinking, eating, and business go hand in hand.
Taiwan- personal bond or contact is important to the Taiwanese. The Taiwanese
consider splitting a bill the ultimate faux pas.
Thailand- An important quality in business is to have fun. And correctly
pronounce the names of your Thai associates, getting their names right
enhances their respect for you and improves your chances of a successful
transaction.

How do Business Buyers Make Their Buying Decision?

Problem recognition- when someone in the company recognizes a problem or

need. •Internal stimuli- need for new product or production equipment
External stimuli- idea from a trade or advertising.
General need description- describes the characteristics and quantity of the
needed item
Product specifications- The buying organization next develops the item's
technical specifications.
Product-value-analysis- engineering team is assigned to the project.
Supplier search- The buyers now tries to identify the most appropriate suppliers.
Proposal solicitation- The buyers will now invite qualified suppliers to submit
proposals. Supplier selection- The buying center will rate suppliers against these
attributes and identify the most attractive suppliers.
Order-Routine specification- The buyer now negotiates the final order with the
chosen suppliers.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Performance Review- In their stage, the buyer reviews the performance of the
particular suppliers.

Three methods are used:

•The buyer may contact the end users and ask for their evaluations.
•The buyer may rate the supplier on several criteria using a weighted score method.
•The buyer might aggregate the cost of poor performance to come up with adjusted
costs of purchase, including prices.

Institutional and Government Markets

The Institutional Markets- consists of schools, hospitals, nursing homes, prisons and
other institutions that provide goods and services to people in their care. Many
Institutional markets are characterized by low budgets and captive patrons.

The Government Markets- offers large opportunities for many companies, either
big or small. In most countries, government organizations are major buyers of goods
and services.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Chapter 9
Identifying the Company’s Competitors
Companies must avoid “competitor myopia.” A company is more likely to be
“buried” by its latent competitors than by its current ones.
Four level of competition
Brand competition – a company can see its competitors as other companies
offering similar products and services to the same customers at similar prices.
Industry competition – a company can see its competitors more broadly as all
companies making the same product or class of products.
Form competition – a company see its competitors even more broadly as all
companies manufacturing products that supply the same service.
Generic competition – a company can see its competitors still more broadly as all
companies that compete for the same consumer dollars.
Industry Concept of competition
An industry is defined as a group of firms that offers a product or class of
products that are close substitutes for each other.
Factors Determining Industry Structure
Number of sellers and degree of differentiation – the starting point for describing
an industry is to specify whether there are one, few, or many sellers and whether
the product is homogeneous or highly differentiated.
Types of industry structure types
Pure monopoly – exists when only one firm provides a certain product or service
in a certain country or area (post office, local electricity company).
Pure oligopoly – consists of a few companies producing essentially the same
commodity (oil, steel, and so on.)
Differentiated oligopoly – consists of few companies producing partially
differentiated products (autos, camera, and so on).
Monopolistic competition – industry consists of many competitors able to
differentiate their offers in whole part (restaurant, beauty shop, and so on).

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Pure competition – consists of many competitors offering the same product and
service (stock market and commodity market).
Entry and mobility barriers – ideally, firms should be free to enter industries that
show attractive profits. Their entry would lead to more supply and ultimately
bring down profits to normal rate of return.
Exit and Shrinkage Barriers – are legal or moral obligations to customers,
creditors, and employees; government restrictions; low asset salvage value due to
overspecialization or obsolescence; lack of alternative opportunities; high vertical
integration; emotional barriers; and so on.
Cost structures – each industry will have a certain cost mix that will drive much
of its strategic conduct.
Vertical integration – in some industries, companies will find it advantageous to
integrate backward and/or forward. Vertical integration often effects lower costs
and also more control over the value-added stream.
Global reach – Companies need to compete on global basis if they are to achieve
economies of scale and keep up with the latest advances in technology.
Determining the competitors’ objective
Are shaped by many things, including its size, history, current management, and
economics.
Market Concept of Competition
Opens the company’s eyes to a broader set of actual and potential competitors and
stimulates more long-run strategic market planning.
Identifying the competitors’ strategies
A company’s closest competitors are those pursuing the same target markets with
the same strategy. A strategic group is a group of firms following the same
strategy in a given target market.
Assessing the competitors strength and weaknesses
The company needs to identify each competitor’s strength and weaknesses. As a
first step, a company should gather recent data on each competitor’s business,
particularly sales, market share, profit margin, return on investment, cash flow,
new investment, and capacity utilization.
Balancing Customer and Competitor Orientations
Competitor-centered company – is one whose moves are basically dictated by
competitors’ action and reaction. The company tracks competitors’ moves and
market shares on a market-by-market basis.
Customer-centered-company - would focus more on customer developments in
formulating its strategies. It would pay attention to the following developments.
Benchmarking
The art of finding out how and why some companies can perform tasks much
better than other company.
Three variables that every company should monitor:
Share of market – the competitor’s sales share in the target market.

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 DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

Share of mind – the percentage of customers who named the competitor in

responding to the statement, “Name the first company that comes to mind in this
industry.”
Share of heart – the percentage of customers who named the competitor in
responding to the statements, “Name the company from whom you would prefer to
buy the product.”
Estimating the Competitors’ Reaction Patterns
A competitor’s objectives and strength/ weaknesses go a long way toward
indicating its likely moves and reactions to company moves such as a price cut, a
promotion step-up, or a new-product introduction.
The laid-back competitor – they may feel their customers are loyal; they may be
milking the business; they may be slow in noticing the move; they may lack the
funds to react.
The selective competitor – it might respond to price cuts in order to signal that
they are futile. But it might not respond to advertising expenditure increases,
believing them to be less threatening.
The tiger competitor – signaling that another firm had a better not attack because
the defender will fight to the finish.
The stochastic competitors – such a competitor might or might not retaliate on a
particular occasion, and there is no way to foretell this based on its economics,
history, or anything else.
Designing the competitive intelligence system
Setting up the system – identifying vital types of competitive information,
identifying the best sources of this information, and assigning a person who will
manage the system and its services
Collecting the data – the company has to develop effective ways of acquiring
needed information about competitors without violating legal or ethical standards.
Evaluating and analyzing – the data are checked for validity and reliability,
interpreted, and organized in an appropriate way.
Disseminating and responding – key information is sent to relevant decision
markers, and managers’ inquiries about competitors are answered.
Selecting competitors to attack and avoid
They will have a better sense of whom they can effectively compete with in the
market.
Strong versus weak competitors
The firm should also compete with strong competitors to keep up with the state of
the art.
Close versus distant competitors
The company should avoid trying to destroy the close competitor
“Good” versus “Bad” competitors
Good competitors – they play by the industry’s rules; they make realistic
assumptions about the industry’s growth potential; they make realistic
assumptions about the industry’s growth potential; they set prices in a reasonable
relation to costs; they favor a healthy industry; they limit themselves to a portion

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DON HONORIO VENTURA TECHNOLOGICAL STATE UNIVERSITY
MEXICO CAMPUS
San Juan Mexico, Pampanga

or segment of the industry; they motivate others to lower costs or improve

differentiation; and they accept the general level of their share and profits.
Bad competitors – violate the rules: they try to buy share rather than earn it; they
take large risks; they invest in over capacity; and in general, they upset the
industrial equilibrium.

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