Chapter 3:

Market Opportunity
Analysis: Buying
Behavior and Market
Segmentation
 “
2

CONSUMER
MARKET
 3

Characteristics Influencing Buyer

Behavior in Consumer Markets:
1. Cultural Characteristics

2. Social Characteristics
3. Personal Characteristics
4. Psychological Characteristics
 4

2. Social Class
 When boarding a plane, hierarchy is
most evident with those in first
class are asked to board first,
then business class, then premium
economy, with the economy class as
last to board. The hierarchy shows
ranking of wealth, power and
prestige
 5
Cultural Characteristics (How a
learned world view can influence
buying behavior)

1. Culture and Sub-Culture

 Muslims bury their deceased
relatives within 2 days. Buddhists,
on the other hand, do not move the
body of their deceased for 8 hours
so that the spirit of the deceased
can realize what has happened. Both
believe death is transition from
life to another.
Social Characteristics (How people 6
around us can influence buyer
behavior)

1. Family
 Demand for product such as long-
distance calls is influenced by the
Pinoy’s strong family attachment.
Skype and similar software that
allow voice calls over internet are
now a medium of choice among
Filipinos with relatives abroad, as
it is free way of communication via
the computer or a smartphone with
connection.
2. Reference Group 7
 In the Philippines election, the
religious group Iglesia ni Cristo
is known to vote as a bloc, where
at least 77 percent of their
members follow the instruction on
who to vote for in the last two
major elections.
3. Roles and Statuses
 Mont Blanc pens are positioned as
the pen for presidents of companies
as well as countries; while Johnny
Walker Black Label Whiskey, and BMW
are example of products positioned
for successful people.
Personal Characteristics (How 8

personal circumstance can influence

behavior)

1. Age and Life Cycle

 Newly married couples are a good
market for home appliances like
Moulinex, and Dyson, or furniture
from BLIMS
2. Occupation
 Call center employees working on
night shifts have encouraged more
restaurants to open 24 hours.
 9

5. Personality
 Actress Kris Aquino has a candid
brand personality. She has been
honest about her many failed
relationships and people love her
transparency
 Under Armour is brand that exudes
excitement, specially with
basketball star Stephen Curry as
endorser
2. Perception 10

 Netflix has a documentary called,

“Forks Over Knives” showing
research correlation of high dairy
consumption to high osteoporosis
cases such as in the U.S. and New
Zealand. It also showed that eating
fruits and vegetables is not just a
way to stay healthy but can even
reverse cancer and heart disease.
3. Learning
 Made in Germany is a label
connoting precision quality and
reliable products
Psychological Characteristics 11

(How self-concept can influence buyer

behavior)

1. Motivation
 Donations and Helping others are
examples of satisfying a person’s
self-actualization needs. Among the
Philippines’ top philanthropists
helping Filipinos are rags-to-
riches billionaires SM’s Henry Sy,
PNB’s Lucio Tan, JG Summit’s John
Gokongwei, and Megaworld’s Andrew
Tan
3. Economic Circumstances 12

 The costs of labor in foreign

countries have brought about the
rise of the call center industries
in developing countries like India
and the Philippines where labor is
cheaper.
4. Lifestyle
 Millennials are now saving and
spending relatively more in travel
than in clothes, this as part of
their Activities, Interests and
Opinions (AIO) as can be seen in
Facebook posts.
 13

4. Beliefs and Attitudes

 Some consumers think that
installing chimes can bring good
luck to homes and offices.
Businessmen like the number 8 car
plates numbers are being charged a
premium of Php 20, 000 - 30, 000 if
the numbers end in several 8 or
when 168 (meaning: one road to
prosperity is requested)
 “
14

SOME OF THE
TRENDS IN THE
PHILIPPINES
 Work: Women:
Home:
The desire to migrate and The increasing number of
The rise of stay-home
the rise of the middle- millennial women who do
“housebands” looking
class from the Overseas not know how to cook or
after children and house
Filipino Worker (OFW) cook as well as their
needs.
segment. moms.

Shopping:
Communication: Technology: The continuous popularity
of “tingi” (small portion),
The ownership of multiple The rise of virtual reality
sachets, “lista” (credit)
mobile phones. and augmented reality.
and 4-gives installment
for better affordability.
 Channel:
Buying Preference:
The growing popularity
The move to take care
of multi-level marketing
of skin not just to have
(MLM) as distinguished
good cosmetics.
from illegal pyramiding

Lifestyle:
The desire to buy new
gadgets and to spend
on travel.
 18

What will
I drink?
Coffee or
?
STEP 1: PROBLEM RECOGNITION (Why do I
need to make this purchase)
STEP2: INFORMATION Search (where do I get
my information relevant to my need?)
STEP 3: EVALUATION OF ALTERNATIVES (what
are available attributes and how do I
prioritize these attributes, including
brand image?)
STEP 4: PURCHASE DECISION (what will I
buy (product brand), from whom (seller),
when, how much (price and how many
(quantity)?)
Step 5: post purchase behavior (how di I
feel after using the product or service?)
PESTLE STIMULI MARKETING BUYER’S  CONSUMER BUYER’S
STIMULI CHARACTERISTIC DECISION DECISION
S PROCESS

 Political  4Ps for  Cultural  Problem  Category

 Economic Product  Social Recognition  Product
 Social  Product  Personal  Information  Brand
 Technological  Price  Psychological Search  Channel
 Legal  Place  Evaluation of  Vendor or
 Environmental  Promo alternatives Sales
 Purchase Representa
 7Ps for Decision tive
Service  Post-  Timing
 People purchase  Quantity
 Process Decision  Payment
 Physical Method
Environment
 “
21

BUSINESS
MARKET
 22

Characteristics Influencing Buyer Behavior

in business Markets:
1. Environmental influences
2. Organizational influences
3. Situational influences
4. Interpersonal influences
5. Individual influences
 23

Environmental Influences

1. Supply condition
 Supplier alliances are needed to
ensure continuous supply
2. Competitive Developments
 Technology, cost can used as
competitive advantage
 New ownership of a supplier company
can be attractive to business
market when they can leverage on
the new relationship
 24

3. SOCIAL RESPONSIBILITY
 Become the determining dimension
of a purchase such as LBC will
deliver relief goods for free to
calamity areas
 Philex Mining planted 2850
hectares with 10 million trees
as part of their social
responsibility
 25

SITUATIONAL INFLUENCES

1. Age and Life Cycle

2. TIME
3. FINANCIAL STANDING
4. AVAILABILITY
5. EXCLUSIVITY
6. SPECIAL OFFERS
 26

ORGANIZATIONAL INFLUENCES

1. Objectives
2. Policies
3. Procedures
4. organizational STRUCTURES
5. SKILLS
6. SYSTEM
 27

interpersonal INFLUENCES

1. INTERESTS
2. AUTHORITY
3. STATUS
4. EMPATHY
5. PERSUASIVENESS
 28

INDIVIDUAL INFLUENCES

1. AGE
2. INCOME
3. EDUCATION
4. JOB POSITION
5. PERSONALITY
6. RISK TOLERANCE
7. CULTURE AND CUSTOMS
STEP 1: PROBLEM RECOGNITION
STEP2: GENERAL NEED DESCRIPTIONS
STEP 3: PRODUCT SPECIFICATION
STEP 4: SUPPLIER SEARCH
Step 5: PROPOSAL SOLICITATION
Step 6: PURCHASE DECISION
Step 7: ORDER ROUTINE SPECIFICATION
Step 7: SUPPLIER PERFORMANCE REVIEW
 31

What are the

similarities
and
Differences of
Consumer and
Business
Market?
 32

 Identify target market

 Fully understand their customers
SIMILARITIES
 Demonstrate value-creation
 Be trustworthy brands and sellers
 Create a pricing scheme
affordable to their target market
 Have customer bonding with their
customers
 Outperform competition
 Be profitable
 33

DIFFEENCES
 MARKETING
MANAGEMENT
PROCESS
34
MARKETING MANAGEMENT PROCESS
OPPORTUNITIES

MARKET SEGMENTATION

POSITIONING

MARKETING MIX
35
 36

What
opportunities
should be
adopted and
launched in the
marketplace?
 37
Internally Generated Growth Opportunities
3 Major Ways to What is it? Examples
Seek Opportunities
Market Penetration Growth by having Inquirer newspapers’
existing products in availability in the
an existing market bakery channel
(Where similar targeting early
product already risers
exist)
Product Development Growth by having new Felta Books
product in an transformed from
existing market being a book selling
company to a school
technology service
provider, providing
not just textbooks
but also educational
DVDs, Lego robotics
 Internally Generated Growth Opportunities(cont’d) 38

3 Major Ways to What is it? Examples

Seek Opportunities
Market Development Growth by having an Inquirer newspapers’
existing product, availability in the
which may or may not bakery channel
need some targeting early
modification to risers
enter a new market
2 other ways
Merger and Monde Nissin and
Acquisition (M&A) Nippon Indosari
Corpindo
Diversification
SMC reinventing
itself from a food
and beverage giant
to a diversified
conglomerate
Key Questions for Core Strategy: Segmentation, Targeting 39
and Positioning
 BASIS FOR
MARKET
SEGMENTATION
FOR CONSUMERS
40
 41

Basis for Market

○ By needs and wants
Segmentation for
Consumers
(or benefit)
○ By socio-demographics
○ By consumer behavior
○ By psychographics
 NEEDS AND WANTS
S E G M E N TAT I O N
A major way to segment a market is by
identifying consumer needs and wants. An
example is the multi-milliom peso market
for vitamins and mineral which segments
the market based on “Component”.

Examples are:
 Cetrin, which contains vit. C, is in
the single-component need segment

 Enervon, which contains vit. C and B

complex, is in the 2 or 3 component
need segment 42
 SOCIO-DEMOGRAPHICS
S E G M E N TAT I O N
 Market segmentation most often
start with demographics but this
alone cannot be used. It must be in
a conjunction with other
segmentation types.

 I deals with questions “Who are

you?” and “How much do you earn?”
and commonly used when planning and
allocation selling efforts

 Common segmentation method 43

 VA R I A B L E S O F
DEMOGRAPHIC
S E G M E N TAT I O N

44
 VA R I A B L E S O F
DEMOGRAPHIC
S E G M E N TAT I O N

45
 VA R I A B L E S O F
DEMOGRAPHIC
S E G M E N TAT I O N

46
 BEHAVIORAL
S E G M E N TAT I O N
 Segmentation by consumer behavior.
Understanding consumer behavior has
its obvious applications. For
intance:

 Customers who tend to be loyal to a

brand will mot likely not to
respond to a competito’s price cut,
at least, not immediately.
 Place or distribution, display and
packaging can be critical for self-
conscious buyers of intimate 47
 VA R I A B L E S O F
B E H AV I O R A L
S E G M E N TAT I O N

48
 VA R I A B L E S O F
B E H AV I O R A L
S E G M E N TAT I O N

49
 VA R I A B L E S O F
B E H AV I O R A L
S E G M E N TAT I O N

50
 PSYCHOGRAPHIC
S E G M E N TAT I O N
 Concerned more with questions “who
do you?” (instead of “who you
are?”) and “How you spend your
money?” ( instead of “How much you
earn?”
 Often used for creating advertising
messages
 It also relates to social issues,
personal interests, and product
attributes

51
PSYCHOGRAPHICS SEGMENTATION

52
 PRICE
S E G M E N TAT I O N
 Marketers can always benefit
segmentation by price
 The many multivitamins available in
the market can also be segmented
according to price:
 Enervon for economy segment
 Centrum for premium segment
 Pharmaton for super premium segment

53
P SY C H O GR AP H I C S O F T H E S N AC K F O O D S A ND B E VE AG E S M AR K ET I N T H E
P H I L I P P I N E S, AR R A N G E D F R O M M O ST S T R E S SE D T O M O S T B AL A NC E D PA C E
OF LIFE (SOURCE: WORLD OF CONSUMPTION, 2015, KANTAR TNS SYNDICATED STUDY)

54
 55

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 56

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