buyer behavior midterm 2 classes 12-17

B2C

Business to Consumer; buyer is often the user; individual: personal needs, habits, emotions; System 1 type buying

B2B

Business to Business; Multiple ppl influence decision; focus on budget, risk, ROI, reliability; System 2 type buying

B2B Buying Center

A group of individuals within an organization who are involved in the decision-making process for purchasing decisions. This includes initiator, gatekeeper, influencer, decider, purchaser, and user (ppl may share a role)

Initiator

Recognizes a need and starts the process (show why need deserves action)

Gatekeeper

Controls access; show compliance and credibility (ex procurement)

Influencer

Shapes the decision; address area’s needs & support their recommendation (ex consumer insight)

Decider

Determines whether & what to buy; establish ROI, risk, strategic fit

Purchaser

Manages the purchase; make price/terms easy to justify

User

Uses the product; ease of use/benefitis

Financial Benefit Motive

Cost savings, ROI, total cost of ownership, leasing vs. buying

Product/Service Benefit Motive

Features, reliability, sale support

Social/Political Benefit Motive

“How will this purchase affect my standing?”

Personal Benefit Motive

How does this fit the buyer’s self-concept? Will others like or respect them more?

Organizational Buyer Journey

1. Need Recognition

2. Vendor Search

3. Proposal & Evaluation

4. Selection & Purchase

5. Post-Purchase Review

Need Recognition

Someone inside the org identifies a problem or opportunity

Vendor Search

Org defines specs; gatekeepers identify & vet potential suppliers

Proposal & Evaluation

Vendors pitch; buying center evaluates against criteria & hot buttons

Selection & Purchase

Decider approves; purchaser negotiates terms & executes contract

Post-Purchase Review

Performance evaluation; vendor relationship is built or damaged

STP

Segmentation, Targeting, Positioning; We do to try to max ROI

Segmentation

Divide the market; Good segments have 3 notable characteristics: uniform, unique, & identifiable

Uniform within Segment

Similar needs & reasons for using; could have similar implicit or explicit drivers

Unique

Unique from other segments

Identifiable in Market

Attributes to create segment can be used to measure, find, reach customers within it

Traditional Market Segmentation

Includes demographic, geographic, psychographic, & firmographic; opposed to behavioral market segmentation

Demographic Segmentation

Divide on measurable characteristics (ex: gender, age, life stage, income, religion)

Pros of Demographic Segmentation

• Easy to gather and match with media

• Can reveal useful patterns

• Affordable “first filter”

Cons of Demographic Segmentation

• Limited insight into needs

• Easy to misinterpret

• Can alienate buyers if stereotype/exclude

Geographic Segmentation

Divide on location or shared characteristics of geographic area (ex: sprinkler system cares abt area w/ water restrictions

Urbanicity

Urban, suburban, rural

Psychographic Segmentation

Dividing on shared psychological characteristics & lifestyles (NOT behavioral—>purchasing); Can include likes, interests, lifestyles, values/beliefs

Values

What a buyer considers important (principles/priorities)

Belief

What buyers accept as true

Attitudes

How buyers evaluate something (positive/negative)

Opinions

Views/judgement buyers express (ex: “a $6 coffee isn’t worth the money”)

Firmographic Segmentation

ALWAYS B2B; Dividing business market based on shared organizational characteristics

Indexes

Comparing a group with a benchmark (% group w/ characteristic / % comparison pop. w/ characteristic)

Overindexing

Index is over 100 (not necessarily good or bad)

Underindexing

Index is under 100 (not necessarily good or bad)

Category Development Index (CDI)

Compares category sales in a market w/ market’s share of population

CDI = (% total categ. sales) / (% total pop.)

Brand Development Index (BDI)

Compares brand sales w/ market share of pop.

BDI = (% total brand sales) / (% total pop.)

Behavioral Segmentation

Based on patterns of behavior buyers display when interacting w/ a business:

• Purchasing & usage patterns

• Responses to brands & marketing

• Product knowledge & readiness to buy

• Benefits Sought

Buyer Journey

**Buyer can stop at any stage & can cycle between stages**

1. Awareness

2. Consideration

3. Conversion

4. Loyalty

5. Advocacy

Awareness

Buyer recognizes a need or becomes aware of possible solutions

Consideration

Compares options and decides what matters; Can trial and sample

Conversion

Completes purchase

Loyalty

Buyer uses & evaluates; May buy again or choose another option

(+/-)

Advocacy

May recommend (or opposite) to others; write reviews

(+/-)

Benefits Sought Segmentation

Particular outcome/benefit buyers want from a product; Can change, often w/ research

User Based Segmentation

Based on how much/how often brand/product is used

Product Affinity Segmentation

Products or categories buyers show interest in thru purchases or other engagement; What other products do your buyers purchase or use?; Catalina Coupons

Catalina Coupons

• Find partnerships w/ other brands

• Based on purchases & related buying patterns

• Find additional usage occasions

Customer Value Propostiion

Explains value an offering provides to a target customer & why they should choose it over alternatives

All Benefits Proposition

• Quickest & easiest

• List all benefits we believe our offering provides

• Typically explicit drivers

• Longer list isn’t inherently better

Benefit Assertion

All Benefits hurdle; Assuming a feature provides a benefit that matters to customer

Points of Parity

All Benefits hurdle; Benefits that competition also provides, why would customer choose one or other

Favorable Points of Difference

Points of Difference, Points of Contention

Points of Difference

Elements that perform better/worse than alternative and so give an advantage/disadvantage

Points of Contention

Can involve claims of superiority or parity

Ex) “our no-sugar tastes just as good” or “our product is easier to use”

Value Presumption

Favorable Points of Difference hurdle; Assuming an advantage over alternatives must be valuable to target customer

Resonating Focus Proposition

• “Gold standard”

• Focus on one or two points of difference that deliver greatest value to customer

• When needed, also an important point of parity

Distinctive

Superior to alternatives on what matters to customer

Measurable

Quantifies value delivered to customer

Customer Value Research

Resonating Focus hurdle; Must learn WELL what customers value most and what they are worth to the target customer

Customer Value Proposition (CVP) Statements

• Concise statement of who we serve, what they need, and why they should choose us

• Company may develop different CVP statements for different target markets

Elements of Value

Products/services deliver fundamental elements to address four kinds of needs:

• Functional

• Emotional

• Life Changing

• Social Impact

Laddering

• Exploring what drives a preference

• Uses follow-up Q’s to explore what underlies a customer’s stated preference

Net Promoter Score (NPS)

An indicator of customer loyalty

0-10 scale survey

0-6: Detractors; 7-8: Passive; 9-10: Promoters

NPS (not in % form) = % Promoters - % Detractors

Structured Listening

Interview current & prospective customers about:

• priorities

• frustrations & compromises

• alternatives they use or consider

• what works well & delights them

Ideation Sessions

Brainstorming around the elements that were identified in listenting

Ten Types of Innovation

Fall under three categories:

• Configuration

• Offering

• Experience

Configuration

Of the ten types of innovation:

• Profit Model

• Network

• Structure

• Process

Offering

Of the ten types of innovation:

• Product performance

• Product system

Experience

Of the ten types of innovation:

• Service

• Channel

• Brand

• Customer engagement

Concept Testing

Present a clear concept, then gather customer feedback to refine it

Choice Modeling

1. Customers choose among alternatives w/ diff. combinations of attributes & prices

2. Researchers repeat choices w/ diff. combinations

3. Results help estimate trade-offs & identify promising offerings

Customer Segmentation AND Elements of Value

• Segmentation identifies groups of buyers

• EOV help marketers know what each group values

Insights guide offerings and the benefits emphasized in its value poposition