MAR 3023 Exam 2

• need recognition

• search for information

• evaluation of alternatives

• purchase and consumption

• post purchase

What are the steps in the Consumer Decision Process?

Need Recognition (Consumer Decision Process)

consumers recognize they have an unsatisfied need and want to go from their needy state to their desired state

Functional Needs

• pertain to the performance of a product or service

• practical

• solve a basic problem

Physiological Needs

• needs relating to the basic biological necessities of life: food, drink, rest, and shelter

• part of Maslow’s hierarchy

Wants

goods or services that are not necessarily needed but are desired

Search for Information

• consumers look for options to satisfy their needs

  • internal vs. external search

Internal Search for Information

occurs when the buyer examines their own memory and knowledge about the product or service, gathered through past experiences

External Search for Information

occurs when the buyer seeks information outside their personal knowledge base to help make the buying decision

• perceived benefits vs. costs of search

• the locus of control

• perceived risk

What are some factors the affect the Consumer’s Search Process?

Perceived Benefits vs. Costs of Search

a consumer decision-making factor where buyers weigh whether the time, effort, and money spend on gathering information are worth the value gained

Internal Locus of Control

refers to when consumers believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities

External Locus of Control

refers to when consumers believe that fate or other external factors control all outcomes

Performance Risk

• the perceived danger inherent in a poorly performing product or service

• will it do what I need it to do?

Financial Risk

• risk associated with a monetary outlay

• includes the initial cost of the purchase as well as the costs of using the item or service

• is it worth the money?

Social Risk

what are other people going to think?

Psychological Risk

• associated with the way people will feel if the product or service does not convey the right message

• how do I feel about it?

Safety/Physiological Risk

the fear of an actual harm should a product not perform properly

universal, retrieval, and evoked

What are the sets of Evaluation of Alternatives?

Universal Set

all possible choices for a product category

Retrieval Set

those brands or stores that the consumer can readily bring forth from memory

Evoked Set

comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision

Conversion Rate

a measure that indicates what percentage of visitors or potential customers click, buy, or donate at the site

• customer satisfaction

• postpurchase cognitive dissonance

• customer loyalty

• negative word of mouth

What are the Post Purchase factors?

Customer Satisfaction

• build realistic expectations, not too high and not too low

• demonstrate correct product use - improper usage can cause dissatisfaction

• stand behind the product or service by providing money-back guarantees and warranties

• encourage customer feedback, which cuts down on negative word or mouth and helps marketers adjust their offerings

• periodically make contact with customers and thank them for their support

Postpurchase Cognitive Dissonance

• the psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors that in turn evokes a motivation to reduce the dissonance

• buyers’ remorse

• more likely to purchase products that are:

  • expensive, infrequently purchased, do not work as intended, associated with high levels of risk

• return policies

• thank-you letters

• congratulations letters

• tags on garments

How do firms attempt to reduce purchase dissonance?

Customer Loyalty

• markets attempt to solidify a loyal relationship:

  • analytics software

  • customer relationship management (CRM) programs

• they do this to acquire and retain loyal customers

Negative Word of Mouth

• occurs when consumers spread negative information about a product, service, or store to others

• ex: personal blogs, Twitter, corporate websites

• use listening software to identify and quickly respond to issues

• proactive issue resolution reduces complaints

• if a customer believes a complaint will result in a positive action, negative word of mouth is less likely

How do companies respond to negative word of mouth?

• motives

• attitudes

• perception

• learning and memory

• lifestyle

• social factors

• marketing mix

• situational factors

What are the Factors Influencing the Consumer Decision Process?

Motive

a basic need that drives consumers to solve a problem and satisfy a need

Attitude

• a person’s enduring evaluation of their feelings about behavioral tendencies toward an object or idea

• consists of three components: cognitive, affective, behavioral

Cognitive

a component of attitude that reflects what a person believes to be true

Affective

a component of attitude that reflects what a person feels about the issue at hand - their like or dislike of something

Behavioral

a component of attitude that comprises the actions a person takes with regard to the issue at hand

Perception

• the process by which people select, organize, and interpret information to form a meaningful picture of the world

• we assign meaning to:

  • color, symbols, taste, packaging

• culture, tradition, and our overall upbringing determine our perception of the world

Learning

• a person’s though process or behavior that arises from experience and takes place throughout the consumer decision process

• causes change in thoughts or behaviors

Memories

psychological factors that affect decision-making that consist of information that has been acquired and stored in the brain, to be available and utilized when needed consists of information stored in the brain and can influence decision making

Information Encoding Stage

the first stage in memory development in which consumers transform information that they receive about products or services into storable information

Information Storage Stage

the second stage in memory development that refers to how that knowledge gets integrated and stored with what consumers already know and remember

Informational Retrieval Stage

the third stage in memory development in which consumers access desired information

Lifestyle

refers to how consumers decide to spend their time and money to live

Actual Lifestyle

how consumers measurably allocate their time and financial resources on daily activities

Perceived Lifestyle

reflects an idealized or projected self-image

Social Factors

• family

• reference groups

• culture: the shared meanings, beliefs, morals, values, and customs of a group of people

Marketing Mix

product, price, place, promotion

Situational Factors

• purchase situation

• sensory situation

• temporal state

Maslow’s Hierarchy of Needs

• a paradigm for classifying people’s motives

• it argues that when lower-level, more basic needs (physiological and safety) are fulfilled, people turn to satisfying their high-level human needs (social, esteem, and self-actualization)

Involvement

consumer’s interest in a product or service

High Involvement

• develops strong attitudes and purchase intentions

• greater attention and deeper processing

Low Involvement

• generates weak attitudes and increased use of cues

• less attention and peripheral processing

Extended Problem Solving

• a purchase decision process during which the consumer devotes considerable time and effort to analyzing alternatives

• often occurs when the consumer perceives that the purchase decision entails a lot of risk

Limited Problem Solving

occurs during a purchase decision that calls for, at most, a moderate amount of effort and time

manufacturers, resellers, institutions, government

What are the four different types of B2B markets?

Manufacturers

• buy raw materials, components, or parts

• manufacture their own goods and ancillary services

Resellers

• marketing intermediary that resells manufactured products without significantly altering their form

• ex: wholesalers, distributors, retailers

Wholesalers

firm engaged in buying, taking title to, often storing, and physically handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users

Distributors

• a type of reseller or marketing intermediary that resells manufactured products without significantly altering their form

• distributors often buy from manufacturers and sell to other businesses like retailers in a B2B transaction

Institutions

• hospitals, educational institutions, and religious organizations

• examples of purchases by institutions:

  • textbooks, capital construction, equipment, supplies, food, janitorial services

Government

• one of the largest purchasers of goods and services in most countries

• local, state, and federal governments

• the US government spends approximately $4 trillion annually - department of defense works with cybersecurity firms

• need recognition

• product specification

• RFP process

• proposal analysis, vendor negotiation, selection

• order specification

• vendor performance assessment

What are the parts of the B2B Buying Process?

Need Recognition (B2B Buying Process)

• stage 1

• the B2B process begins with need recognition

• can be generated internally or externally

Product Speciation

• stage 2

• the firm creates a list of potential specifications

• used by suppliers and vendors to develop proposals

RFP Process

• stage 3

• the firm invites vendors to bid on supplying their required specifications in the request for proposals:

  • use websites

  • use web portals

  • contact vendors directly

Web Portals

an Internet site whose purpose is to be a major starting point for users when they connect to the web

Request for Proposals (RFP)

a process through which buying organizations invite alternative suppliers to bid on supplying their required components

Proposal Analysis, Vendor Negotiation, and Selection

• stage 4

• the firm evaluates all proposals in response to RFP:

  • narrow down list of suppliers

  • negotiates terms with several

  • considers multiple factors

Order Specification

• stage 5

• the firm places an order with its preferred supplier (or suppliers) detailing all terms of the service:

  • description

  • price

  • delivery date

  • penalty for noncompliance

Vender Performance Assessment

• stage 6

• firms analyze their vendors’ performance so they can make decisions about their future purchases

  • formal

  • objective

• buying center roles

• buying culture

• buying situation

What are the Factors that are Affecting the Buying Process?

• initiator

• influencer

• decider

• buyer

• user

• gatekeeper

What are the Buying Center Roles?

Initiator

the buying center participant who first suggests buying the particular product or service

Influencer

the buying center participant whose view influence other members of the buying center in making the final decision

Decider

the buying center participant who ultimately determines any part of or the entire buying decision - whether to buy, what to buy, how to buy, or where to buy

Buyer

the buying center participant who handles the paperwork of the actual purchase

User

the person who consumers or uses the product or service purchased by the buying center

Gatekeeper

the buying center participant who controls information or access to decision makers and influencers

Buying Culture

• organizational culture

• building B2B relationships

autocratic, democratic, consultative, consensus

What are the different types of buying cultures?

Autocratic

one person decides alone

Democratic

majority rules

Consultative

one decides after getting input

Consensus

all must reach collective agreement

Organizational Culture

• reflects the set of values, traditions, and customs that guide a firm’s employees’ behavior

  • unspoken guidelines

  • influences purchasing decisions

Building B2B Relationships

• blogs

• social media (X, YouTube, LinkedIn)

• social media influencers

• white papers

White Papers

in a B2B context, white papers are a promotional technique used by B2B sellers to provide information about a product or service in an educational context, thereby not appearing like a promotion or propaganda

buying center, new buy, straight rebuy, modified rebuy

What are the factors of a Buying Situation?

Buying Center

the group typically responsible for the buying decisions in large organization

New Buy

• a purchase of a good or service for the first time

• the buying decision is likely to be quite involved because the buyer of the buying organization does not have any experience with the item

  • buyer purchases a good or service for the first time

  • the buying center will probably use all six steps in the buying process and involve many people in the buying decision

Straight Rebuy

• refers to when the buyer organization simply buys additional units of products that have previously been purchased

  • buyer purchases additional units of products that have been previously purchased

  • most B2B purchase fall into this category

  • usually, the buyer is the only member of the buyer center involved

Modified Rebuy

• refers to when the buyer has purchased a similar product in the past but has decided to change some specifications, such as the desired price, quality level, customer service level, options, and so forth

  • buyer purchase a similar product but changes certain specifications:

    • price

    • quality level

    • customer service level

  • current vendors likely have an advantage

Globalization

the processes by which goods, services, capital, people, information, and ideas flow across national borders

Accessing Global Markets

• marketers have variety of opportunities because of globalization:

  • market viability assessment: four sets of criteria

  • more complete picture of market potential

• economic analysis using metrics

• analyzing infrastructure and technology

• analyzing government actions

• analyzing sociocultural factors

What are the four components of Country Market Assessment?

Economic Analysis Using Metrics

• firms must consider three major economic factors to assess the viability of a potential market:

  • general economic market

  • market size and population growth rate

  • real income

Trade Deficit

results when a country imports more goods than it exports

Trade Surplus

occurs when a country has a higher level of exports than imports

Gross Domestic Product (GDP)

• defined as the market value of the goods and services produced by a country in a year

• the most widely used standardized measure of output

Gross National Income (GNI)

consists of GDP plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy)

Purchasing Power Parity (PPP)

a theory that states if the exchange rates of two countries are in equilibrium, a product purchased in one will cost the same in the other, expressed in the same currency