The Consumer Buying Decision Marketing Essay

The Consumer Buying Decision Marketing Essay Introduction In this assignment I have employed as a business marketing advisor for the Sheffield Business Support Council where John Ryan from Window World has made contact with. He has been in replacement window industry for fifteen years. Early years of business was doing successfully. Window World had been a focused on upon replacing old windows and doors and constructing and installing new conservatories for customers. First he had resisted and purposely declined approaches from local business. Then he realised move into seeking and accepting orders from business. But overall business over past fourteen months had declined by 25%. The reason why he is seeking advise from us is there is something wrong with their approach in business marketing and sales. So I have allocated to visit the company and offer advise and assistance to them. Task 1. Making money is one part of selling product or service in most businesses. However, it can be much more complicated than that simple model; some businesses serve as the middle man from manufacturer to customer; others sell to other businesses, and some organizations do not follow a financial model that generates a profit for them. All of these business models lead to different types of business transactions. There are three buying decisions consumer goes through. These are limited problem solving, habitual decision making, and extended problem solving. Limited problem solving happens during a purchase decision that calls for, at most, a moderate amount of time. Limited problem solving usually based on past experience more than an external information. Habitual decision making describes a purchase decision process in which consumers engage little effort. Marketers strive to attract and maintain habitual purchasers by creating strong brands and store loyalty. Extended problem solving is a common when the customer thinks that purchase decision causes a massive risk. To reduce risk, customer does lots of information. Also there are factors that affects consumer decision process which are psychological factor, marketing mix, social factor, situational factor. Psychological factors Although marketers themselves can influence purchase decisions, psychological factors affect the way people receive marketers message. There are motives, attitudes, perception, and learning Social factors The decision process is also influenced by the external, social environment , which consists of customers family, reference groups, and culture. Family Many purchase decisions are made about products or services that the entire family will consume. So, firms must consider how families can do the purchase decisions. Reference group One or more person whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviour. Culture Defined as the shared meanings, beliefs, morals, values and customs of group people. Business Purchase The process of selling products or services to buying organisation. Therefore, Business to Business marketing involves manufacturers, wholesalers, and retailers. Some firms find it more productive to focus on their efforts and resource on key business customers rather than on ultimate customer. Manufacturers or Producers One of the biggest business-to-business buyers are manufactures and producers. They buy raw material s, components and parts to supply for the product. Resellers They are marketing intermediaries that resell manufactured products without significantly altering their form. Institutions Institutions, such as school and hospitals purchase all kinds of goods and services. Government In most countries, the central government tends to be the one of the largest purchasers of goods and services. The distinction between a B2B and a B2C transaction is not the product or service itself; rather, it is ultimate user of that product or service. Task 2. A  buying center  (also known as a  decision making unit  or  DMU), in  marketing,  procurement, and  organisational studies, is a group of employees or members of any type of organization responsible for finalising major decisions, whether to purchase. These DMU participants can range from employees who have a formal role in purchasing decisions to members are specifying the highly technical purchases, such as information systems or production equipment, also require the expertise of technical specialists. All these employees are likely to play different roles in the buying process, which vendors must understand and adapt to in their marketing and sales efforts. These roles compromised of 6 different roles: -Initiator the person who first suggests buying the particular product or service, often associated with the user -Influencer anyone outside of DMU with influence on its members, has knowledge about potential suppliers -Decider the person with the authority to make the decision to buy-whether to buy, what to buy, how to buy, or where to buy -Buyer the person who is tasked to make actual purchase for doing paperwork etc. (handle the paperwork) -User the person who is consumes or uses the product or service -Gatekeeper the person who controls information or access, or both, to decision makers and influencers All these roles tend to be more formal and by job title. Degree of influence may still be affected by a strength of personality. Also these specialised buying centres typically receive information about the product or service from commercial sources, peers, publications and the experience. The number of individuals involved in purchasing will relies on the complexity of the need, the value of the purchase and the level of risk held to be connected to the decision.  The people taking on the different roles of the DMU vary with each purchasing occasion, but it is important for suppliers to identify the members of the DMU and recognize their particular needs so that communication efforts can be customized in each single case. According to Morris et al (2001), the mechanism of the DMU is of critical importance to the B2B marketer. Morris (1992) states that  one approach to clarify what takes place among  the participants in the purchasing decision process is to focus on the structure of the DMU. Since the DMU is normally not a formal group, its structure is not formally established by the organisation. Task 3. Buying process begin when consumer recognize that they need unsatisfied need. Research suggests that customers go through a five-stage decision-making process through before, during, and after making purchases. This five-stage decision-making process summarised in the diagram below. The Consumer Buying Decision This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages. Need Recognition The buying process starts with need recognition. At this stage, the buyer has an unsatisfied need and want to go form their actual, needy to state to a different, desired state. Information Search The second step, after a consumer recognises a need, is to search for information about the various options that exist to satisfy the need. Customer can get information from internal and external research for information. Internal research is customer uses own memory and knowledge about the product or service, gathered through the past experiences. For the external research, buyers seek to information outside of own personal knowledge base to help make the buying decisions. These are can be personal source -friends, family; commercial source- advertising, salespeople; public source- newspapers, radio etc. Alternative Evaluation Research has shown that a consumers mind organises and categorise the alternatives to a support their decision process. When consumer begin to evaluate different alternatives, they often base their evaluations on a set of important attributes or evaluative criteria. Purchase Value is a strong driver of consumers purchase decisions. Customers seek out and purchase the products and services that they believe provide them with the best value. Then, after consumers have access to the product or service, they usually consume it. Post Purchase The final step of the consumer decision process is post purchase behaviour. It is common for customers to experience concerns after making a purchase decision. For the business decision process occurs to include six different stages. Though it differs many ways from consumer decision process, both started with need recognition. Information search and evaluation of alternatives steps are more formal and structured in B2B process. Typically, B2B buyers specify their needs in writing and task potential suppliers to submit formal proposals, whereas B2C buying decisions usually made by individuals or families. The diagram below has shown business decision process. Business-to-Business Decision Process Need Recognition In the first step of the B2B buying process, the buying organisation recognises through either internal or external sources, that has a drained need. Product Specifications After recognising the need, the organisation considers alternative solutions and come up with potential specifications that suppliers might use to develop their proposals to supply the product. RFP Proposals The request proposals (RFP) is a common process through which buying organisation invite alternative suppliers to bid on supplying their required components. The purchasing company may simply post its RFP needs on its Web site, work through various B2B linkages. Proposal Analysis and Supplier Selection The buying organisation, in conjunction with its critical decision maker, evaluates all the proposals it receive in response to its RFP. Firms are likely to narrow the process to a few suppliers, often those with which they have existing relationships, and discuss key terms of the sale, such as price, quality, delivery, and financing. Order Specification In the fifth stage, the firm place its order with its preferred supplier. The order will include detailed description of goods, prices, and delivery dates. Vendor analysis An organization that supplies specific goods or services to the business markets. Before that firm analyse their vendors performance, strengths and weakness of current and prospective suppliers in terms of their capacity, sales revenue, reputation, stocks, service etc. The Business DMP and the Consumer DMP looks similar but its really quite different because of its formality. The table below shows differences between Business DMP and Consumer DMP. Business DMP Consumer DMP High priority problem solving mode Low priority solving mode Interested in features Interested in advantages of product Risk factor is greater Risk is not high Not spending their own money Spending own money Sales cycle is longer Sale is instant Narrow segment for the product Entire sales market of customers Task 4. The type of buying situation also affects the business to business decision process. Most B2B buying situations can be categorised into three types: A new task buying  situation appears when the company has no earlier experience of the product or service and is buying it for the first time (Smith Taylor, 2002). In this kind of situation, the greater the cost or risk, the larger will be the number of decision contributors and the greater will be their efforts to collect information (Kotler et al., 2002). A modified rebuy  situation emerges when the buyer has some previous experience of the product or service(Smith Taylor, 2002), but wants to modify product specifications, prices, terms or sup-pliers  (Kotler et  al., 2002).   Finally, a straight rebury  situation appears when the company  buys on a regular basis (Smith Taylor, 2002). In this situation, the buyer reorders something without any modifications. It is generally handled on a routine basis by the purchasing department (Kotler et al., 2002).   These varied types of buying situations call for very different marketing and selling strategies. The most complex and difficult is the new task buying because it requires the buying organisation to make changes in current practices and purchases. In new buying situations, the buying center members spend more time at each stage of B2B buying process. Modified buying is probably using existing criteria. Straight re-buys often happens when the buyer recognise the firms need and skipping all the buying process and go directly buy. So new task buying is more intense than modified buying and straight re-buying situations. What we missing at Window World are: Window World need to engage the business, marketers need persuasive content that appeals to both logic and emotion. The communication strategy should serve prospective buyers as well as their current customers with lifetime value. What they need is make customers to open Window Worlds web site and take their phone and calls. Strategic approach to build long-term relationship with buyer, it is mutually beneficial. Answering why and how would be start of new buying situation, telling them why they need their product and how it solves their business problems. Also doing the re-enforcing value and purchase satisfaction with exiting customers . One of important thing is that their product can be easy to purchase. More importantly, key account management (KAM) changes in selling  . KAM is a completely different organizational process used by business-to-business suppliers to manage their relationships with strategically-important customers, and it produces measurable business benefits. Role of sales people in KAM Customer Partner Buyer Behaviour Expert Buyer-seller Team Coordinator Customer Service Provider Information Gatherer Service Provider Market Analyser and Planner Market Cost Analyser Technologist Task 5. Window world has been delivering excellent returns with consumers. Marketers are particularly interested in post purchase behaviour because it causes actual rather than the potential customers. Satisfied customers, whom marketers hope to create, become loyal, and spread word of mouth, so they are quite important. There are three positive post purchase outcomes as illustrated in table 1; increased customer satisfaction, decreased post purchase dissonance, and increased customer loyalty. Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. The achievement of customer satisfaction leads to company loyalty and product repurchase. Setting unrealistically high consumer expectations of the product through the advertising, personal selling, or other types of promotion may lead to higher initial sales, but it eventually will result in dissatisfaction when the product fails to achieve the high performance expectations. This failure could lead to dissatisfied customers and the potential for negative word of mouth. On the other hand, setting customer expectations too low is equally dangerous strategy. So marketers can take several steps to ensure post purchase satisfaction, such as these: -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 guaranties and warranties. -Encourage customer feedback, which cuts down on negative word of mouth. -Periodically make contact with customers and thank them for their support. Because customers appreciate human contact, even it is expensive than e-mail or mail contacts. Also it gives you opportunity to correct mistakes. Post purchase dissonance Post purchase dissonance is basically an after purchase cognitive  behaviour. While evaluating the  benefits after a purchase it is common for customers to be concerned about their purchase decision. It is caused by  cognitive dissonance. Here the customer thinks that if customer had purchased some other item it would have been better than the one customer bought. Simply customer is not  completely  satisfied with the purchase and is most likely to switch brands. Marketers can avoid post purchase dissonance the below: Under promise and over deliver. You dont need to under promise, but just make sure you deliver on the promises you make. The sale doesnt end with the sale.  As in, the sale is the start, not the end of the relationship so make sure that you behave in that way.   Follow up on the sale, ask for feedback (and act on it).   Do the nice little unexpected things that you didnt promise this could be a message a week into the sale with a voucher for money off a complementary product or even just a little card to say, thanks for your purchase, we really appreciate it., although I might then think, If you appreciate it show me the money! so an offer or freebie would be appreciated more. Anticipate what might go wrong.  Think through the customer journey and try to remove any of the pain-points they might hit.  Take that approach to every stage of the user experience and youll continue not to disappoint your customer. If something does go wrong, act accordingly.  Sometimes things go wrong. Say sorry and then fix the problem.   Sometimes the best relationships start this way. Loyalty In the post purchase decision making process, marketers attempt to solidity in relationship with their customers. They want customers to be satisfied with their purchase and buy from same company again. Loyal customers only will buy certain brands and shop at certain stores. Firm build loyalty by keeping touch with customers using e-mail marketing, thank you cards and more. treating own team well so they treat your customers well. showing that you care and remembering what they like and dont like. Firm build it by rewarding them for choosing you over your competitors. Firm build it by truly giving a damn about them and figuring out how to make them more success, happy and joyful.