Principles of Marketing : Chapter 6 (business buying behavior)

In the previous chapter we discussed the buying behavior of the customers, in this chapter, we will elaborately discuss the buying behavior in business markets. So business buying behavior is basically the purchase behavior of a company that buys goods or services for further processing or the goods/products are sold to other business, lease out to other suppliers. Like in consumer buying behavior (CBB), black box in the business market is known as buying centers.  Like in consumer buying behavior (CBB), the environment is same for the business market as well, but through buying centers and the process of buying is different for every organization through which buying behavior is also different. What makes (CBB) with business buying behavior (BBB) is the change in market structure and demand. Since the transaction is solely (B2B) business to business so there are few buyers and few sellers. The Second one is Geographic concentration, a product is manufactured through different parts and these parts are imported from different parts of the world, the case of iPhone. Price remains "In-elastic" (for example when the price of petrol (gasoline) increases, the demand somehow remain constant or the impact on demand is very less). And lastly, the buyer is solely dependent on the seller or the supplier.

The types of buying situations in BBB are of three types 1) Straight Re-Buy: when in the consignment, there is no modification, like supplying stationery to Bahria University, the order will remain constant. 2). Modify re-buy: when a customer changes their purchase behavior on the basis of price, quantity, or suppliers, 3) New task: when your buying behavior is developed on the basis of something new or new product development.

Buying centers as discussed above are those specific entities who are involved in the buying process. The intensity of the power in buying behavior depends on the position that entity holds. It consists of 5 types. 1). Users are basically the customer who consume a particular product. 2) Influencers are technical people who define specifications and provide information. 3) Buyers are basically the procurement department which has the power of selecting the suppliers and consignments. 4) Deciders are the top management who put a final decision of selection it can be the finance department. 5) Gatekeepers basically control and circulate the information it can be the office secretary

Moving forward with the Business buying behavior process. This process is more complexed and elongated than the consumer buying behavior process. The main reason behind it is the involvement of more cost and technicalities. The first part is Problem recognition (it can be through internal, within organization or external (outside organization). The company will see if there is any problem or any shortage of any supplies. The second part is General need description where we quote the quantity of the goods needed to eliminate the problem. Product specification describes the technicalities of the products which are required. For example, if the company wants to buy several computers, general need description tells us, we need 20 computer and product specification tell you we need quad core intel process i7. Value analysis describes the process of reducing cost and find the best alternative to reduce the price. Since Tender is opened and a lot of suppliers bid on it, supplier selection criteria involve critically select suppliers on the basis of cost reduction and value creation. Through a rigorous process, few of the suppliers are selected from a vast pool and then they were asked to submit the proposal of intent (proposal solicitation). After carefully examining the proposal one supplier is selected, which fits best for the job. After that, the company places few orders to the supplier (order routine specification) and after the consignment is delivered the company gives the performance evaluation review of it.

Lastly, the world is changing day by day because the technology is changing day by day. There comes the invention of E-Procurement. It is basically to facilitate both the buyer and seller. It helps to optimize the above-mentioned process in an easy way. You can approach or select buyer from any part of the world, easy to communicate and easy to put an order on the website.


#buyingbehaviorinbusinessmarkets#buying centers#Geographic concentration#In-elastic#Straight Re-Buy#Modify re-buy#New task#E-Procurement#Business buying behavior process.

Principles of Marketing . Chapter 5 : Consumer buying behavior and Markets

This chapter illustrates the buying behavior of consumers who buy or consume good for their personal use. The Question rise over here is what is the basic difference between customers and consumers. Since customers are those entities which buy good for themselves or for someone else. They might be the end consumer or not. But consumers are those people which buy good for themselves and they are the end consumers. The model of consumer behavior consists of three parts. The first one is the “environment” it can be a micro or a macro environment in it. Second is the black box and the third one is buyers response. The most important part of this model is the black box. Since the concept was taken from an airplane which has a black box and it records every piece of information. Every consumer has this system installed in their brain. That is why the advertisement or IMC promotions are same for everyone but not everyone buys that product because every person is different from another.

The buying behavior is different because there are some factors which influence or change the consumer behavior. The first factor is the Cultural part which talks about the learned believe, wants, perceptions of an individual. Furthermore, it elaborates the concept of sub-culture where it talks about people within a specific culture. Like in Pakistan we have Pathans, Punjabis, Urdu speaking, since sub-culture is different from one and another and for sure their buying behavior is also different. The second factor is the social class which talks about different groups. Since we have this generic definition that people standard of living is social class. But In marketing, we put a bit of a microscope in it. Basically, we talk about membership group ( where a person belongs to a specific group, family, culture) and aspirational group ( where a person wants to be, where he gets inspiration from, his role model or a celebrity. Like Imran Khan (PTI) majority of the youth in Pakistan gets inspired by him and follow his footsteps for getting Insaaf (justice). Opinion leaders are one which has advanced knowledge about something and has huge following regarding it. For example in mobile industry, GSM arena is an opinion leader’s website where people get reviews about mobile phones. The third one is the personal factor, where three factors affect them: personal income, savings, and interest rate. Since the most important one is interest rate as it is given by the government through which taxes are implemented and it affects your saving and your personal income.

Maslow hierarchy is a basic concept where we discuss five stages of needs. First one is Physiological need ( your basic need, house, clothes, and food) safely need ( where you need protection for yourself and for your family) Social need ( As human is a social animal and he need people to talk and survive), Esteem needs (Where you want people to know your name, your speciality and recognize you as a distinct factor in a society) lastly self-actualization ( where you forget yourself and thinks about the society and do something for people, best example is Sattar Ehdi).
Perception is basically a process where people decode a piece of information through the lens of their eye, for example, people screen information which is not beneficial for themselves (selective attention). People won't listen to bad things about what they already bought, for example telling a friend regarding how hideous or expensive iPhone-X is, he/she will never believe your information and probably gives you a shut up call (selective distortion) and lastly selective retention (where customer recalls good points about the brand).

Learning is a concept where you learn a behavior through repetitive experience. It is made up 5 components 1). Drives (identification of a need), 2) Stimulus (the motivation to fulfil that need), Cues (the process of getting the product to fulfil the need, it can be sale, discounts), 4) Response (the process of purchasing that product), 5) Reward (reinforcement, appreciation).

The Buying decision making process is a process starts from need recognition, it can be internal motivation(need satisfaction) or it can external (trigged through advertisement or IMC tools). 2) Information search, you search for information from family or friend or through experiential marketing. 3) Evaluating the alternatives, where you choose a brand on the basis of perceived benefits and values. 4) Buying decision, where you acquire that product and lastly 5) Post-purchase behavior where the utmost value and loyalty is created. It is not the responsibility of the company to give it but yet they give you for the future revenues.

Last part is TALC (technological adoption life-cycle) since the adoption of a new technology is not that common and only few of the customer adopt the new technology (Innovators), and with the passage of time technology become common for everyone can use it.

#customersconsumers#black box#Cultural part#sub-culture#Opinion leaders#Maslow hierarchy#Perception#Learning#Buying decision making process #TALC (technological adoption life-cycle)

Principles of Marketing : Chapter 4 (Managing marketing information)

As discussed in chapter 3, one of the most important parts of micro-environment is the customer/consumers. It is very vital for the marketers to put a detail microscope on each and every customer. So Consumer insights actually talk about studying your consumer in more detail and how to create value through it. Although it is very important to get that information, at the same time it is difficult to obtain. In today’s era, companies which are not consumer-centric are facing a huge amount of problem regarding gathering new customers. To make things easier, Academicians create a software known as Marketing Information System in which you can gather information from the customer then store it and then dispense it to the respective managers or departments. Since manual work will take a lot of time and will be costly.

"Research" basically is of two types, Qualitative (study more closely about human behavior and their experience) and Quantitative focuses more towards numbers and gather data from a larger audience and then generalize it. Different techniques will be discussed in detail.

Three most important tool to gather data are : Internal data ( as the word internal suggest itself, acquiring data and information within the company from employees and workers) , Competitive marketing intelligence ( where you get data from public which is readily available, you can do surveys in that or see how your competitor is performing) , Market research (To collect and store data with a current situation a company is facing, for example company want to launch a new product for this they have to do market research about the demands and needs of the customers). Types of market research will be discussed in upcoming semesters.

To conduct a market research you need to create a market plan in which you find a specific gap (management problem) to be fulfilled. Then you will start defining your objectives how to fulfill them, what kind of information is required to complete my objectives, and lastly, for conducting research you will be needing a significant amount of budget because you have to travel, pay people etc.

In terms of data, there are two types vis-e-vis Primary (first-hand information which you have collected through surveys, interview) and Secondary (previous work done in that domain where your key interest is for e.g. literature review).

Furthermore, Research approaches are observational research (a type of primary research where you observe critically, for example, their shopping behavior, the way they spend, how much they spend. The time span of observation is less. Another type of research is Ethnography, where time span of research is expanded to years and you observe it in a natural setting. For example, I want to run an ethnography on a family buying behavior and their lifestyle for this I have to stay with them for few years see them in a natural setting, blend with them and make a report out of it. Survey research, you develop a questionnaire on the basis of your research objectives and then you ask people regarding it or tell them to fill that questionnaire. And lastly Experimental research in which you collect primary information in a controlled setting like I want to launch a new product and I want to test market it before commercialization, I just ask some of the outlets about display it and I can monitor people reaction regarding it.

For Qualitative research, we focus more towards human interaction, their experiences, lifestyle. Here we conduct a Focus group, where a group of people shares their opinion regarding a topic floated by the mediator(researcher), In-depth interviews, where one to one interview is conducted to see how he/she respond to the questions and further probe them to get the desired answers.

#Consumer insights#Marketing Information System#Qualitative#Quantitative#Internal data#Competitive marketing intelligence#Market research #observational research#Ethnography#Survey research#Experimental research

Principles of Marketing : Chapter 3 (Market-Environment)

For the expansion of a company whether in a national market or international market, one should focus on its micro and macro environment. So Marketing environment consists of Micro (close to the company) environment and macro (wider aspect for company) environment.

Firstly, we going to discuss Micro-environment where different factors like the company itself, their suppliers, people who are in the middle (market intermediary), competitors, general public and most importantly customers. The most important part which is played in micro environment is executed by supplier. Since suppliers are the critical part in any firms supply chain. Various suppliers provide various products in different intensity. So company have to create value for them as well (like dispatch their payments on time) because if suppliers won’t provide your product on time there will a massive delay in your delivery and it won’t be available for the customer at the right time and you can lose your value and customer can shift it to the competitors. Further types of micro environment will be discussed in your class.

Macro environment consist of factors which are outside company and helps them to expand their operations nationally as well as internationally. Normally we put macro environment in terms of PESTLE analysis. Which stands for:

1) Political (In Pakistan there are major political instability, riots happen and people close main highways, due to which products won’t reach in time to the stores.  

2) Economic, it is very important for company to prevail forward, is to have a good economic environment. Since Pak rupee is devaluating day by day and prices of the commodities increase so company have to cater it by increasing their prices and can lose their customers and profits can decrease.

3). Social, it’s very important for companies to be highlighted in good terms. Re-cycled products, environmental products, fair-trade products are best example to be socially active.

4) Technology, another important component of macro-environment. To achieve massive competitive advantage, company should focus on tech part very seriously. Early adaptation of technology is very costly but helps the company to prevail in blue ocean strategy. JIO(reliance) is the example of introducing latest mobile data technology (4g and 5g) which undermined its competitors.

 5) Legal, to survive in this cut-throat competition the last thing you will do is not to complete legal obligations like taxes, Registrations (case of Starbucks in UK).

 6) Environment, Companies like PTC (Pakistan tobacco company) creates such product which is injurious to health but yet they use the strategy of CSR (corporate social responsibility)  to change consumers image regarding the negative aspect of environmental destruction.

#Marketingenvironment#Microenvironment#macroenvironment#PESTLE#Suppliers#PTC

Principles of Marketing : Chapter 2

As discussed in previous class that marketing is all about creating a certain amount of value and then convert that particular value in the profitable relationship. So the main concern is to create a value and how can a company or a SME's (Small and Medium Enterprise) can develop that value. The answer lies in the creation of an utmost and feasible strategy. So the first thing which needs to be done is to create a strategic fit between your company’s goal and the dynamic changing environment. Since market is changing with the advancement of technology it is bit difficult for the companies to cope up with it.

One thing which is very important for companies is to deeply understand their business portfolio which is made up of different SBU’s (Strategic Business Unit) and different SKU’S (Stock Keeping Units). These two concepts will be discussed in detail. So after that company focuses on their portfolio analysis where company sees which product is performing well in the market and which product should be downsized. Moving towards the concept of SBU, it is basically a category extension where each category is different from one another. For example, Yamaha has guitar equipment and Motorcycles. The strategy for the Guitar equipment will be totally different from the motorcycle. They will be having different vision, mission and marketing mix strategy.  SKU is another concept which depicts the concept where the sizes and variation in packaging differ. SKU plays a role under the umbrella of SBU. For example, nestle bottle water is available in 500 ml, 1 liter and 20 liters, these variations in sizes are SKU’S.

Another major concept is BCG (Boston Consultant Group) matrix (strategy) where you access deeply about the performance of your products. It consists of Stars, cash cows, question marks and dogs. The matrix has two basic dimension: Growth rate and market share (parameters). Stars are your products which are very popular and have both parameters in high stake. Cash cow is basically a product which gives you cash, has more market share but less growth rate. Question marks are your viral products which goes up but can go down as well. And dogs are products which are in loose and company is basically thinking whether to discard that product from portfolio or put heavy investment in it to start again its life. Examples are discussed in your class.

Ansoff matrix or product/market expansion grid is basically a tool for accessing the expansion or growth opportunities for the company. It actually tells whether to develop a new product with new market, existing product with existing market or existing product with new market or new product with existing market.

Value chain again most important topic in marketing and supply chain management. Most vital thing that value chain doesn’t create overnight. It’s a long process and strategy. If HyperStar claims that they have less priced products is because they are getting products at low cost from their players in supply chain. More value to your suppliers, retailers, manufacturers, distributors will ultimately can create value for your customer.

Lastly Managing marketing effort is a process Analyzing, Planning, Implementation and Controlling. In the analysis part you basically do SWOT analysis, in Planning part your major focus is to create a marketing plan. Which has different components. For sure if you have good planning part then you should have a good team to execute it efficiently and effectively. And lastly Controlling part indicates the KPI (Key Performance Indications) it can be done through operating control (performance, meeting the annual plans like sales, profits) or Strategic control (innovations, companies own strategies).

#CompanyStrategy#SBU#SKU#AnsoffMatrix#ValueChain#ManagingMarketingEfforts#SwotAnalysis#KPI's#MarketingPlan

Principles of Marketing : Chapter 1

So the main error of understanding between Marketing and sales is that industry in Pakistan normally confuse sales with marketing and vice versa. There is a substantial difference between both of them. Normally I put marketing as a class room, you have windows, board, rostrum, bench, fans. So marketing is made up for different components like publicity, public relations, sponsorship, digital marketing, sales, advertisement and promotions. So sales is just one component where main strategy is short-term to create profits. While Marketing focus on long-term goals and creating and capturing value to understand the consumer and develop a meaningful relationship. The major concepts furthermore describe about the myopic situation of marketing. Myopia is basically short-slightness of the market. Big giants like Nokia and Kodak suffered from it. It’s basically when companies don’t innovate themselves or their process , they lag behind competitors and in the end they lose their valuable customers.

Marketing management plays in dual nature of a theory. Some practitioners say it’s a sciencewhile some portrays it with an art. But how, Science is because it talks about the concept of sales management (quantitative) and achieving KPI’s, while art is because it talks about the creative part in advertising and ways of promoting your products and services.

De-marketing another concept where companies pull down their demand on the temporary basis. It’s a strategy where companies can’t fulfill the market order or they are full in demand. So not to create a bad image, they de-market in a way that customers value is intact with it.

Lastly the orientation of marketing management is critical because it shows how the shift in economy took place with the steps of creating value. Since for me, this model should be expandable to a case of digital marketing after societal marketing. In Production concept, customer focus on that product which is easily and readily available and easy to use, I put the basic needed products in it. As the transformation goes on, the concept of value generate itself,  where customer will buy or prefer that product which will create value for them.

What is Value then?

V=B/C
value=benefit/cost

More benefit more value , more cost less value

#marketing #marketingmanagement #marketmyopia #sales #bahriauniversity