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Chapter 6: Understanding Consumer and Business Markets
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3.2 Social Influences on
Consumers’ Decisions
Families, friends, and classmates
often influence our decisions, as do
larger groups with which we identify,
such as ethnic groups and political
parties.
3.2.1 Culture
Culture is society’s personality. It is
values, beliefs, customs, and tastes,
produced or practiced by a group of
people. A consumer’s culture
influences his buying decisions.
3.2.2 Values (Again)
Cultural values are deeply held
beliefs about right and wrong ways to
live. Marketers who understand a
culture’s values can tailor their
product offerings accordingly.
Activity: What are the core values of
your culture? How do these core
values affect your behavior as a
consumer? What are the implications
for marketers?
3.2.3 Subcultures
A subculture is a group that coexists
with other groups in a larger culture
but whose members share a
distinctive set of beliefs or
characteristics—such as members of
a religious organization or an ethnic
group. Micro cultures are groups of
consumers who identify with a
specific activity or art form.
For marketers, some of the most
important subcultures are racial and
ethnic groups because many
consumers identify strongly with their
heritage and products that appeal to
this aspect of their identities appeal to
them.
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
3.2.4 Conscientious Consumerism:
An Emerging Lifestyle Trend
Powerful new social movements
within a society also contribute to
how we decide what we want and
what we don’t. One such influence is
consumerism, the social movement
directed toward protecting consumers
from harmful business practices.
Many consumers are becoming very
aware of the social and environmental
consequences of their purchases—and
making their decisions accordingly
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3.2.5 Social Class
Social class is the overall rank of
people in a society. People who are
within the same class work in similar
occupations, have similar income
levels, and usually share taste in
clothing, decorating styles, and
leisure activities. Class members also
share many political and religious
beliefs as well as preferences for
AIOs. Luxury goods often serve as
status symbols; visible markers that
provide a way for people to flaunt
their membership in higher social
classes (or at least to make others
believe they are members).
Mass-class term refers to the hundreds
of millions of global consumers who
now enjoy a level of purchasing
power that’s sufficient to let them
afford high-quality products offered
by well-known multinational
companies.
3.2.6 Group Membership
People act differently in groups than
they do on their own. With more
people in a group, it becomes less
likely that any one member will be
singled out for attention, and normal
restraints on behavior may be
reduced. In many cases, group
members show a greater willingness
Exhibit: Star Wars
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Chapter 6: Understanding Consumer and Business Markets
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to consider riskier alternatives than
they would if each member made the
decision alone.
A reference group is a set of people a
consumer wants to please or imitate.
Consumers “refer to” these groups
when they decide what to wear,
where they hang out, and what brands
they buy.
3.2.7 Opinion Leaders
An opinion leader is a person who
influences others’ attitudes or
behaviors because they believe that
he possesses expertise about the
product. Opinion leaders usually
exhibit high levels of interest in the
product category. They continuously
update their knowledge as they read
blogs, talk to salespeople, or
subscribe to podcasts about the topic.
Because of this involvement, opinion
leaders are valuable information
sources.
3.2.8 Gender Roles
Some of the strongest pressures to
conform come from our gender roles,
society’s expectations regarding the
appropriate attitudes, behaviors, and
appearance for men and women.
These assumptions about the proper
roles of men and women, flattering or
not, are deeply ingrained in marketing
communications.
Men’s sex roles are changing too. For
one, men are concerned as never
before with their appearance. In fact,
appearance ranks as their
second-biggest worry (topped only by
money worries and weighing on them
more than worries about their family
and their health).
Exhibit: Roles for men and women
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Chapter 6: Understanding Consumer and Business Markets
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4. BUSINESS MARKETS:
BUYING AND SELLING WHEN
THE CUSTOMER IS ANOTHER
ORGANIZATION
Business-to-business marketing is
the marketing of goods and services
that businesses and other
organizations buy for purposes other
than personal consumption. These
business-to-business markets or
organizational markets include
manufacturers, wholesalers, retailers,
and a variety of other organizations,
such as hospitals, universities, and
government agencies.
4.1 Types of Business-to-Business
Customers
Figure 6.6 looks at the three major
classes of B2B customers (producers,
resellers, and organizations).
4.1.1 Producers
Producers purchase products for the
production of other goods and
services that they in turn sell to make
a profit. They are customers for a vast
number of products from raw
materials to goods manufactured by
still other producers.
4.1.2 Resellers
Resellers buy finished goods for
reselling, renting, or leasing to
consumers and other businesses.
Although resellers do not actually
produce goods, they do provide their
customers with time, place, and
possession utility by making the
goods available to consumers when
and where they want them.
4.1.3 Government and
Not-for-Profit Organizations
Governments and not-for-profit
institutions are two other types of
organizations in the business
marketplace. Government markets
Figure 6.6
Snapshot:
The Business
Marketplace
Table 6.1: The North American
Industry Classification System: A Sample
Figure 6.7 Snapshot: Key Differences in Business
versus Consumer Markets
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Chapter 6: Understanding Consumer and Business Markets
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make up the largest single business
and organizational market in the
United States.
Not-for-profit institutions are
organizations with educational,
community, and other public service
goals, such as hospitals, churches,
universities, museums, and charitable
and cause-related organizations such
as the Salvation Army and the Red
Cross.
4.1.4 The North American
Industry Classification System
Marketers can identify their
customers using the North American
Industry Classification System
(NAICS). This is a numerical coding
of industries developed by the United
States, Canada, and Mexico. The
NAICS reports the number of firms,
the total dollar amount of sales, the
number of employees, and the growth
rate for industries, all broken down by
geographic region. Firms may also
use the NAICS to find new
customers.
4.2 Factors That Make a Difference
in Business Markets
In theory, the same basic marketing
principles hold in both consumer and
business markets—firms identify
customer needs and develop a
marketing mix to satisfy those needs.
However, there are differences that
make business-to-business marketing
more complex. Some of the
differences are described next.
4.2.1 Multiple Buyers
In business markets, products often
have to do more than satisfy an
individual’s needs. They must meet
the requirements of everyone
Table 6.2:
Differences between Organizational and
Consumer Markets
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
involved in the company’s purchase
decision.
4.2.2 Number of Customers
Organizational customers are rare
compared to end consumers. In the
United States, there are about 100
million consumer households but less
than half a million businesses and
other organizations.
4.2.3 Size of Purchases
Business-to-business products can
dwarf consumer purchases both in the
quantity of items ordered and in the
price of individual purchases.
Recognizing such differences in the
size of purchases allows marketers to
develop effective marketing
strategies.
4.2.4 Geographic Concentration
Many business customers are located
in a small geographic area rather than
being spread out across the country.
Discussion: How do
business-to-business markets differ
from consumer markets? How do
these differences affect marketing
strategies?
Activity: Pick a product. Put the size
and complexity of the business
market into perspective by tracing
back all of the elements that had to
come together to make the product.
The text gives a good example of the
manufacture of jeans.
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4.3 B2B Demand
Demand in business markets differs
from consumer demand. Most
demand for B2B products is derived,
inelastic, fluctuating, and joint.
4.3.1 Derived Demand
Figure 6.8
Process: Derived Demand
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Chapter 6: Understanding Consumer and Business Markets
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Business customers do not purchase
goods and services to satisfy their
own needs. Businesses instead
operate on derived demand, because a
business’s demand for goods and
services comes either directly or
indirectly from consumers’ demand
for what it produces. Because of
derived demand, the success of one
company may depend on another
company in a different industry. The
derived nature of business demand
means that marketers must constantly
be alert to changes in consumer trends
that ultimately will have an effect on
B2B sales.
4.3.2 Inelastic Demand
Inelastic demand means that it
usually does not matter if the price of
a business-to-business product goes
up or down—business customers still
buy the same quantity. Demand in
business-to-business markets is
mostly inelastic because what is being
sold is often just one of the many
parts or materials that go into
producing the consumer product. It is
not uncommon for a large increase in
a business product’s price to have
little effect on the final consumer
product’s price.
Business-to-business demand is not
always inelastic. Sometimes
producing a consumer good or service
relies on only one or a few materials
or component parts. If the price of the
part increases, demand may become
elastic if the manufacturer of the
consumer good passes the increase on
to the consumer.
4.3.3 Fluctuating Demand
Business demand also is subject to
greater fluctuations than is consumer
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
demand. There are two reasons for
this:
First, even modest changes
in consumer demand can
create large increases or
decreases in business
demand.
A product’s life
expectancy—some
machinery needs to be
replaced every 10 or 20
years and marketers have
to work hard to even out
production.
4.3.4 Joint Demand
Joint demand occurs when two or
more goods are necessary to create a
product.
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5. BUSINESS BUYING
SITUATIONS AND THE
BUSINESS BUYING DECISION
PROCESS
5.1 The Buyclass Framework
Like end user consumers, business
buyers spend more time and effort on
some purchases than on others. This
usually depends on the complexity of
the product and how often they need
to make the decision. A buyclass
framework identifies the degree of
effort required of the firm’s personnel
to collect information and make a
purchase decision. These classes,
which apply to three different buying
situations, are straight rebuys,
modified rebuys, and new-task buys.
5.1.1 Straight Rebuy
A straight rebuy refers to the routine
purchase of items that a B2B
customer regularly needs. The buyer
has purchased the same items many
times before and routinely reorders
them when supplies are low, often
Figure 6.9 Elements of the Buyclass Framework
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Chapter 6: Understanding Consumer and Business Markets
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from the same suppliers. Reordering
the items takes little time.
5.1.2 Modified Rebuy
A modied rebuy occurs when a firm
decides to shop around for suppliers
with better prices, quality, or delivery
times. This situation also can occur
when the organization confronts new
needs for products it already buys.
Modified rebuys require more time
and effort than straight rebuys. The
buyer generally knows the purchase
requirements and she has a few
potential suppliers in mind.
5.1.3 New-Task Buy
A first-time purchase is a new-task
buy. Uncertainty and risk characterize
buying decisions in this classification,
and they require the most effort
because the buyer has no previous
experience on which to base a
decision.
A prospective customer’s new-task
buying situation represents both a
challenge and an opportunity.
Although a new-task buy can be
significant in and of itself, many
times the chosen supplier gains the
added advantage of becoming an “in”
supplier for more routine purchases
that will follow.
►Marketing Moment In-Class
Activity
Ask students to compare the various
B2B buying tasks with consumer
decision processes. What similarities
do they see? How might this affect
the sales process differ with each type
of purchase process? (Straight
Rebuy=Habitual; Modified
Rebuy=Limited; New-task
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Chapter 6: Understanding Consumer and Business Markets
buy=Extended Decision Process)
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5.2 Professional Buyers and
Buying Centers
Trained professional buyers typically
carry out buying in
business-to-business markets. These
people typically have titles such as
purchasing agents, procurement
officer, or directors of materials
management. Professional purchasers
shop all day, every day. They are
responsible for selecting quality
products and ensuring their timely
delivery.
The buying center is the group of
people in the organization who
participate in the decision-making
process. Although this term may
conjure up an image of “command
central” buzzing with purchasing
activity, a buying center is not a place
at all. Instead, it is a cross-functional
team of decision makers. Generally,
the members of a buying center have
some expertise or interest in the
particular decision, and as a group,
they are able to make the best
decision. Depending on the
complexity of the purchase and the
size of the buying center a participant
may assume one, several, or all of the
following roles:
Initiator: begins the
buying process by first
recognizing that the firm
needs to make a purchase.
User: a member of the
buying center who
actually needs the product.
Gatekeeper: the person
who controls the flow of
Table 6.3
Roles in the Buying Center
Figure 6.10
Process: Steps in the Business Buying Process
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Chapter 6: Understanding Consumer and Business Markets
information to other
members.
Influencer: the person(s)
who affects the buying
decision by dispensing
advice or sharing
expertise.
Decider: the member of
the buying center who
makes the final decision.
Buyer: the person who has
responsibility for
executing the purchase.
5.3 The Business Buying
Decision Process
The following is a description of the
five steps involved in the business
buying decision process.
5.3.1 Step 1: Recognize the
Problem
The first step occurs when someone
sees that a purchase can solve a
problem. Two events may occur in the
problem recognition step. First, a
request or requisition, usually written,
is made. Then, depending on the
complexity of the purchase, a buying
center may be formed.
►Marketing Moment Activity
Have students identify and think about family decisions
in which all members of the family participated (New
home? Relocation? Family pet? Family vacation?).
How do the corporate roles compare to the roles
individual family members play? In their family, who
tends to play which roles? (i.e., Dad maintains the cars;
Mom ‘screens’ phone calls, etc.)
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5.3.2 Step 2: Search for
Information
The buying center searches for
information about products and
suppliers in this second step.
Members of the buying center may
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Chapter 6: Understanding Consumer and Business Markets
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individually or collectively refer to
reports in trade magazines and
journals, seek advice from outside
consultants, and pay close attention to
marketing communications from
different manufacturers and suppliers.
The job of marketers is to make sure
the information is available when and
where business customers want it.
Business buyers often develop
product specications, that is, a
written description of the quality,
size, weight, color, features, quantity,
training, warranty, service terms, and
delivery requirements for the
purchase. Once the product
specifications are in hand, the next
step is to identify potential suppliers
and obtain written or verbal
proposals, or bids, from one or more
of them.
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5.3.3 Step 3: Evaluate the
Alternatives
The buying center assesses the
proposals in this stage of the buying
decision process. Total spending for
goods and services can have a major
impact on the firm’s profitability. All
things being equal, price is the
primary consideration. Pricing
evaluations must take into account
discount policies for certain
quantities, return-goods policies, the
cost of repair and maintenance
services, terms of payment, and the
cost of financing large purchases. For
capital equipment, cost criteria also
include the life expectancy of the
purchase, the expected resale value,
and disposal cost for the old
equipment.
Although a bidder is often selected
because it offers the lowest price,
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
there are times when the buying
decision is based on other factors.
The more complex and costly the
purchase, the more time buyers spend
searching for the best supplier—and
the more marketers must do to win
the order. In some cases, a company
may even ask one or more of its
current customers to participate in a
customer reference program. In these
situations, customers formally share
success stories and actively
recommend products to other
potential clients, often as part of an
online community composed of
people with similar needs.
Marketers often make formal
presentations and product
demonstrations to the buying center
group.
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5.3.4 Step 4: Select the Product
and Supplier
The next step in the buying process is
the purchase decision—the selection
of the best product and supplier to
meet the firm’s needs. Reliability and
durability rank especially high for
equipment and systems that keep the
firm’s operations running smoothly
without interruption. For some
purchases, warranties, repair service,
and regular maintenance after the sale
are important.
One of the most important decisions
for a buyer is how many suppliers can
best serve the firm’s needs.
Sometimes one supplier is more
beneficial to the organization than
multiple suppliers are. Single
sourcing, in which a buyer and seller
work quite closely, is particularly
important when a firm needs frequent
deliveries or specialized products.
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Chapter 6: Understanding Consumer and Business Markets
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Multiple sourcing means buying a
product from several different
suppliers. Under this system,
suppliers are more likely to remain
price competitive.
Sometimes supplier selection is based
on reciprocity, which means that a
buyer and seller agree to be each
other’s customers by saying
essentially, “I’ll buy from you, and
you buy from me.” The U.S.
government frowns on these types of
agreements and often determines that
the agreements are illegal, limiting
free competition.
Outsourcing, also known as
offshoring, occurs when firms obtain
outside vendors to provide goods or
services that might otherwise be
supplied in-house.
Reverse marketing occurs when
buyers try to find suppliers that can
produce specifically needed products
and then attempt to “sell” the idea to
the suppliers. The seller aims to
satisfy the buying firm’s needs.
Discussion: The practice of buying
business products based on sealed
competitive bids is popular among all
types of business buyers. What are
the advantages and disadvantages of
this practice to buyers? What are the
advantages and disadvantages to
sellers? Should companies always
give the business to the lowest
bidder? Why or why not?
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5.3.5 Step 5: Evaluate
Postpurchase
An organizational buyer assesses
whether the performance of the
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
product and the supplier is living up
to expectations. The buyer surveys
the users to determine their
satisfaction with the product as well
as with the installation, delivery, and
service provided by the supplier.
Activity: List the five steps of the
business buying decision process.
Explain the activities that occur in
each. Pick a product. Explain what
might happen as the business buyer
moves through this process.
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5.4 B2B E-Commerce and Social
Media
Business-to-business (B2B)
e-commerce refers to the Internet
exchanges between two or more
businesses or organizations. B2B
e-commerce includes exchanges of
information, goods, services, and
payments.
Using the Internet for e-commerce
allows business marketers to link
directly to suppliers, factories,
distributors, and their customers,
radically reducing the time necessary
for order and delivery of goods,
tracking sales, and getting feedback
from customers.
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5.4.1 Intranets and Extranets
Many companies maintain intranets,
which provide more secure means of
conducting business. An intranet is an
internal corporate computer network
that uses Internet technology to link
company departments, employees,
and databases. Intranets give access
only to authorized employees.
When a company allows certain
suppliers, customers, and others
outside the organization to access its
intranet, the system is known as an
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Chapter 6: Understanding Consumer and Business Markets
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extranet. A business customer who
has been authorized to use a
supplier’s extranet can place orders
online. Extranets can be especially
useful for companies that need to
have secure communications between
the company and its dealers,
distributors, and/or franchisees.
Intranets and extranets are very cost
efficient. They allow business
partners to collaborate on projects and
to build relationships.
5.4.2 The Dark Side of B2B
E-Commerce
There are several security issues that
impact B2B e-commerce. When
hackers break into company sites,
they can destroy company records
and steal trade secrets. Both B2C and
B2B e-commerce companies worry
about authentication and ensuring
that transactions are secure. This
means making sure that only
authorized individuals are allowed to
access a site and place an order.
Maintaining security also requires
firms to keep the information
transferred as part of a transaction,
such as a credit card number, from
criminals’ hard drives.
They can give out unauthorized
access to company computer systems
by being careless about keeping their
passwords into the system a secret.
Malware is software designed
specifically to damage or disrupt
computer systems.
A firewall is a combination of
hardware and software that ensures
that only authorized individuals gain
entry into a computer system. The
Copyright © 2018 Pearson Education, Inc.
Chapter 6: Understanding Consumer and Business Markets
firewall monitors and controls all
traffic between the Internet and the
intranet to restrict access.
Encryption means scrambling a
message so that only another
individual (or computer) that has the
right “key” can unscramble it.
5.4.3 B2B and Social Media
Although most of us associate
business use of social media such as
Facebook, LinkedIn, and Twitter with
consumer marketing, B2B
organizations are increasing their use
of and their budgets for social media.
Social media sites:
identify target audiences.
identify with which potential
customers your competitors
interact.
monitor what customers say
about your product, firm, and
competitors.
provide platforms for
conversations, answers to
questions, and shared
experiences.
Real People, Real Choices: Here’s
My Choice…
Dondeena chose option #2.
Doondeena chose option 2.
Copyright © 2018 Pearson Education, Inc.
