Marketing Management 2nd Edition

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Marketing Management2nd Edition

• Michael R. Czinkota and Masaaki Kotabe

• Chapter 4
• Understanding the Buyer

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Buying Process
Problem or need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
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Buying Process
Step 1
Problem or need recognition

• Consumer recognizes a need
• Example Consumer recognizes that he needs to
  upgrade his computer. He wants faster
  processing, more memory, and several other
  features.

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Buying Process
Step 2
Information Search

• Consumer seeks out information to fulfill the
  need.
• Example Consumer searches through PC World and
  other magazines for information on computers.

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Buying Process
Step 3
Evaluation of Alternatives

• Consumer evaluates the options that may fulfill
  his needs.
• Example Consumer selects several different
  brands and models of computers to consider and
  evaluates them.

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Buying Process
Step 4
Purchase Decision

• Consumer decides which product or brand to
  purchase.
• Example Consumer decides to buy a Dell Computer
  by mail.

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Buying Process
Step 5
Post-Purchase Behavior

• Consumer will use the product and evaluate his or
  her decision.
• Example Consumer decides the brand was a good
  choice.

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Postpurchase (Cognitive) Dissonance

• Postpurchase Dissonance a consumer reaction
  after making a difficult decision that involves
  doubt and anxiety
• Probability of experiencing dissonance increases
  based on
• Degree of commitment or irrevocability
• Importance of the decision
• Difficulty in choosing
• Individuals tendency to experience anxiety

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Postpurchase Dissonance (contd.)

• Approaches to reduce dissonance
• Increase the desirability of the brand purchased
• Decrease the desirability of rejected brand
• Decrease the importance of the purchase
• Reverse the purchase decision (return before use)

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Influences on the Consumer
Social class
Geography
Age
Occupation
Economy
Culture
Organization
Peer pressure
Values lifestyle
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Influences on the Consumer

• Economic factors
• Personal income
• Economy
• Price
• Age and Life Cycle
• Age groups
• Traditional life cycle
• New life cycles

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Influences on the Consumer

• Geography
• PRIZM zip codes
• e.g., Blue Blood Estates Public Assistance
• World regions
• Social Class
• Occupation
• Income level

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Influences on the Consumer

• Culture
• Nationality
• Ethnicity
• Age group
• Peer Pressure
• Membership groups
• Reference groups
• Aspirational groups
• Family
• Nuclear vs. Extended

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Reference Groups for a College
Membership groups
Reference groups
Camera club
Athletic club
Successful young businesspeople
Employees at job
Friends
Classmates
Family
Dorm or roomates
Professional athletes and entertainers
Spectators at various events
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Education

• In Japan, 99 percent of the population is
  literate, whereas in the United States up to 15
  percent of the population are functionally
  illiterate
• Around 36 percent of the U.S. population is
  college-educated, one of the worlds highest
  percentages.

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Lifestyle and Values

• The Japanese save about 13.1 percent of their
  income, whereas Americans save about 4.7 percent.
• U.S. consumers have a high debt-to-income ratio.
  Credit is very available in the United States,
  but lower-income borrowers pay fairly high
  interest rates.

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VALS 2 Segmentation System
Actualizers
Fulfillers
Achievers
Experiencers
Minimal resources
Abundant resources
Strivers
Believers
Makers
Strugglers
Principle Oriented
Action Oriented
Status Oriented
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Influences on the Consumer

• Diffusion of innovation
• Innovators (2.5)
• Early adopters (13.5)
• Early majority (34)
• Late majority (34)
• Laggards (16)
• Psychological factors
• Dissatisfiers satisfiers
• Hierarchy of needs

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Organizational Purchasing

• Categories
• Basic raw materials
• Components
• Capital goods
• Supplies

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Differences Between Industrial and Consumer
Markets

• Reciprocity
• Relationship Marketing
• Reverse Marketing
• Derived Demand
• Joint Demand

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Organizational Purchasing

• Roles in buying center
• Users
• Influencers
• Deciders
• Approvers
• Buyers
• Gatekeepers

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Usage and Loyalty

• Usage Status
• Usage Rate (80/20 Rule)
• Types of loyalty behavior
• Hard-core loyals
• Loyals
• Shifting loyals
• Switchers

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Customer Churn

• Customer churn refers to customer defection or
  turnover.
• Many cellular carriers lose 25 percent of their
  subscribers each year at a cost of 2 to 4
  billion.
• Reducing defection requires
• Define and measure retention rate
• Distinguish causes of customer attrition and
  identify those that can be managed better
• Estimate how much profit it loses when it loses
  customers (customer lifetime value)
• Determine how much it would cost to reduce the
  defection rate

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Complaint Resolution

• Of customers who register a complaint, 54 to 70
  percent will buy again if their complaint is
  resolved. If the customer feels the complaint was
  resolved quickly, the figure goes up to 95
  percent.
• Customers whose complaints were satisfactorily
  resolved tell an average of five people about the
  good treatment they received.
• Service America!, 1985