Marketing Management-I

Connecting the Customer

18th Nov 2008

By :

Kumar Amit
MBA in International Business (Switzerland) Bachelor in Computer Science (Chennai)

Relationship Officer:ABN AMRO

Slide No : 01

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Course Contents
What Influences Consumer Behavior Buying Decision Process: Five Stage model Organizational Buying Participants in Business Buying Process Purchasing/Procurement Process Institutional & Government markets

Relationship Officer:ABN AMRO

Slide No : 02

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Consumer behavior
Consumer behavior is the study of how individuals, groups, and organizations select, buy, use and dispose of goods,services,ideas or experiences to satisfy their needs and wants. Studying consumer behavior provides clues for improving or introducing products or services, setting prices & developing other marketing strategies.

Relationship Officer:ABN AMRO

Slide No : 02

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

1 2 3

Cultural Factors Social factors Personal factors

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Cultural Factors
Cultural factors exert the broadest & deepest influence. Culture is the fundamental determinant of a persons wants & behavior. Example:
1. Culture (child growing up is exposed to values, perception)

2. Subculture (nationalities, religions, racial groups) 3. Social class (members share similar values, interests & behaviors) Markets used the term called Socioeconomic classification (SEC) to classify buyers in urban areas,A1-A2,B1,B2,C,D,E1,E2 with A1 signifying highest purchase potential & E2 signifying the lowest.
Relationship Officer:ABN AMRO Slide No : 26 ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Social Factors
Social influence:Information and Pressures from Individuals, groups, and the mass media that affect how a person behaves.e.g Family, Role & Status, Reference groups (friends, neighbors, co-workers, religious & tradeunion groups) Types of Reference Groups:
Aspirational Reference Groups: a group that we admire and desire to be like, person hope to join. Associative Reference Groups: a group to which we currently belong. Dissociative reference groups: a group we do not want to emulate Note: Role consists of the activities a person is expected to perform. Each role carries a status. Reference group consists of all the groups that have a direct or indirect influence on his/her attitude or behavior.

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Personal factors
Buyers decisions are also influenced by personal characteristics. These includes (examples) Buyers age & stage in life cycle Occupation & economic circumstances Personality & self concept Lifestyle & values. Consumption is shaped by family life cycle. Marketers also consider critical life events or transitions. Tailor products for certain occupational groups. product choice is greatly affected by economic situation like income-saving, assets, debts.
Slide No : 26 ERP Functional Consultant

Relationship Officer:ABN AMRO

Marketing Management-I

Connecting the Customer

Personal factors
Personality : all the internal traits and behaviors that make a person unique. Uniqueness arrives from a person's heredity and personal experience. Examples include:
Relationship Officer:ABN AMRO

Self confidence Friendliness Adaptability Ambitiousness Introversion Extroversion Aggressiveness Competitiveness.

ERP Functional Consultant

Slide No : 26

Marketing Management-I

Connecting the Customer

Personal factors
Lifestyle is a persons pattern of living in the world as expressed in activities, interests & opinion.
e.g. Recent US trends in lifestyles are a shift towards personal independence and individualism and a preference for a healthy, natural lifestyle..

Lifestyle is shaped by whether consumers are money-constrained ( Wal-Mart-everyday low prices) or time-constrained ( multitasking people, Texas Instrument unveiled a product design called WANDAWireless Any Network Digital Assistant, that allows user to talk on a cell phone while web browsing over Wi-Fi while conducting business via Bluetooth)

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Problem Recognition
Stage 1: Problem Recognition Buying process starts when the buyer recognizes a problem or need. Need can be triggered by Internal or External stimuli. Internal stimulus, one of the persons normal needs-hunger
(Hunger stimulates your need to eat), thirst, sex-rises to a threshold level & become a drive etc. External can be stimulated by the marketer, need to trigger a particular need by gathering information from a number of consumers.

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Information Search
A successful information search leaves a buyer with possible alternatives, the evoked set (A group of brands that a consumer is both aware
of and willing to consider as a solution to a purchase)

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Evaluation of alternatives
Evaluation of Alternatives--need to establish criteria for evaluation.

Expectancy-value model
1. Consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits. 2. Rank/weight attributes for each alternative. Assign percentage of importance. 3. Calculate Customer Values (CV) for each alternative. 4. If not satisfied with your choice then return to the search phase.

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Purchase Decision
PURCHASE DECISION
Product Choice

Purchase decision--Choose
buying alternative, includes product, Brand, Dealer, Purchasing amount, Timing, Method of Purchase etc.

Brand Choice Dealer Choice Purchase Amount Purchase Timing Payment Method

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Post purchase Behavior

Post-Purchase Evaluation
Post purchase: Satisfaction or Dissatisfaction Post purchase Action: CRM programs designed to build longterm brand loyalty. Post purchase use & disposal: Marketer should also monitor how buyers use and dispose of the product. Cognitive Dissonance Is the anxiety that occurs when a customer has second thoughts immediately following a purchase.
Can lead to customer complaints, brand switching, or discontinuing Can reduced by: Guarantees and trial, Customer follow-ups, Confirming information from other users.

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

1 2 3

Business Market Vs Consumer Market Buying Situations System Buying & Selling

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Business Market Vs Consumer Market

Perform

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Buying Situations
Perform

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

System Buying & Selling

Perform

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

1 2 3

Buying Center Buying Center Influences Buying Center Targeting

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Buying Center
Initiator: thinks of _______ the product Influencer: _________ final decision Decider: Anyone __________ in final decision Buyer: makes actual purchase User: uses product Evaluator: determines __________ from use

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Buying Center Influences

Perform

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Buying Center Targeting

Perform

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

20th Nov 2008

1 2

Purchasing Orientations Types of Purchasing Process

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Purchasing
Purchasing is the formal process of buying goods and services. Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of the enterprise. Though there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations.

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Basic Purchasing Process

Purchase Request
Reject

Valid Item?
Y
Requester authorised for request?

Reject

Requester

Y
Reject

Budget available? Y

Issue Purchase Order

Delivery Note Goods Received Note
Copy Purchase Order

Purchase Order

Invoice
Match PO, Invoice & Goods Receipt

Query

Supplier

Y Request Payment / Pay (detailed method not shown)

Record expense details / update accounts

Payment

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Purchasing Orientation
Three company purchasing orientations: 1. Buying Orientation 2. Procurement Orientation 3. Supply chain management orientation

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Buying Orientation
In this orientation, the purchaser's focus is short term & tactic. Buyers are rewarded on their ability to obtain the lowest price from suppliers for the given level of quality and availability.

Note: Tactical (method) - a conceptual action used by a unit to achieve a specific objective.

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Procurement
Typically the word purchasing is not used interchangeably with the word procurement, since procurement typically includes Expediting, Supplier Quality in addition to Purchasing. Buyers simultaneously seek quality improvements & cost reduction. Buyers develop collaborative relationships with major suppliers and seek saving through better management of acquisition, material handling, Inventory levels,etc They work closely with manufacturing groups on MRP to make sure supplies arrive on time.
Note: Expediting is to speed up the progress of; accelerate or to execute quickly and efficiently
Relationship Officer:ABN AMRO Slide No : 03 ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Supply chain management

SCM-Here purchasings role is further broadened to become more strategic, tactic & operational. SCM encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thirdparty service providers, and customers.

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Types of Purchasing Process

The purchasing process will vary depending on the types of products involved.
Four kind of Purchasing Processes: 1. 2. 3. 4. Routine products Leverage products Strategic products Bottleneck products
Slide No : 26 ERP Functional Consultant

Relationship Officer:ABN AMRO

Marketing Management-I

Connecting the Customer

Types of Purchasing Process

Routine products:
Low value and Cost to the customer Involve little risk of supply Customer will seek lowest price & emphasize routine ordering. e.g. office supplies

Leverage products
High value and Cost to the customer Involve little risk of supply Customer will compare market offerings & costs & supplier needs to show that its offerings minimizes the customers total cost. e.g. engine pistons
Slide No : 26 ERP Functional Consultant

Relationship Officer:ABN AMRO

Marketing Management-I

Connecting the Customer

Types of Purchasing Process

Strategic products
High value and Cost to the customer Involve high risk of supply Customer will want a well-known and trusted supplier & willing to pay more than the average price. e.g. mainframe computers

Bottleneck products
Low value and Cost to the customer Involve some risk Customer will want a supplier who can guarantee a supply of reliable products. e.g. spare parts

Note: Mainframe-a large powerful computer, often serving many connected terminals and usually used by large complex organizations.
Relationship Officer:ABN AMRO Slide No : 26 ERP Functional Consultant

Marketing Management-I

Connecting the Customer

1 2

Institutional Markets Government Markets

Relationship Officer:ABN AMRO

Slide No : 03

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Institutional Market
Institutional market consists of school, college & universities, churches, charitable organizations, hospitals, nursing homes and other institutions that provide goods and services to people in their care. Companies selling their good to this market need to price carefully because these organizations have limited purchasing power.

Relationship Officer:ABN AMRO

Slide No : 26

ERP Functional Consultant

Marketing Management-I

Connecting the Customer

Government Market
Government org. are a major buyer of goods & services. Government org. typically require supplier to submit bids, and normally they award the contract to the lowest bidder. Government spending decisions are subject to public review, government org. require considerable paperwork from supplier, who often complain about excessive paperwork, bureaucracy,regulation,decision-making delay. Director General of Supplies & Disposal(DGS&D) is the central purchasing organization of Govt of India. This organization is responsible for procurement & purchase of supplies required by various department including defense & railways.
Relationship Officer:ABN AMRO Slide No : 26 ERP Functional Consultant