Blog 2 (Chapters 5, 6, 7)

Chapter 5

Consumer behavior is influenced by various factors such as cultural, social and personal factors. Among these cultural factors exert the broadest and deepest influence.

Consumer behavior refers to the way individuals, groups and organizations select, buy, use and dispose of goods, services or experiences to satisfy their needs and wants. It is of utmost importance for marketers to understand the theory and the reality of consumer behavior.

In this blog I will talk about cultural factors only. Culture is the way of life or in other words the ideas, customs, and social behavior of a particular people or society. The norms, ideas, customs, behavior are embedded in people’s lifestyle. And as such these determine the person’s wand and behavior.

Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups and geographic regions. When subcultures grow larger and affluent enough, companies often design specialized marketing programs to serve them.

Speaking about social classes they are relatively homogenous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interests and behavior. Social class members show distinct product and brand preferences in many areas, including clothing, home furnishings, leisure activities, and automobiles. There are also language differences - advertising copy and dialogue must ring true to the targeted social class.

In my view cultural factors seem not only to influence consumer behavior but also other political and socio-economic issues. It is the foundation of what drives one into their success, freedom, and so on and so forth. Culture is passed on even from one generation to another so it dominates and influences how we behave in each circumstance. When branding, it is important to distinguish the cultural factors inherent to each market or to each situation in order to adapt its product and its marketing strategy since these will play a role in the perception, habits, behavior or expectations of consumers.

I will give an example, in the United States; it is common to invite colleagues or friends at home for a drink or dinner. In Japan, on the contrary, inviting someone at home does not usually fit into the local customs. It is better to eat with friends or colleagues in a restaurant.

Chapter 6

The business buying-decision process includes eight stages called buy-phases. In modified re-buy or straight – rebuy situations some stages are compressed or bypassed. For example, the buyer may have a favorite supplier or a ranked list of suppliers and can skip the search and solicitation stages.

The buying process begins when someone in the company recognizes a problem or need that can be solved by obtaining a good or service. The need is triggered by internal or external stimuli. Internally it could be a decision to develop a new product which requires new equipment and material or a decision to search for new vendors, lower prices or better quality. Externally the buyer may get new idea at a trade show, see an ad, visit a web or a call from a sales representative who offers better products or lower prices.

Next the buyer determines the needed item and the specifications and quantity required. Reliability, durability and price are determined. Here business marketers can help by describing how their products meet or even exceed the buyer’s needs.

The buyer tries to identify the most appropriate suppliers through different channels. For example in my organization we have a vendors database and we always know what each supplier can offer. The searching can also be done through directories, asking other companies, or the internet.

The buyer will then ask suppliers to submit their proposals; in my organization usually we will ask for three proposals (Proforma Invoices) from three suppliers in order to compare prices and specifications, delivery time and quality.

Selecting the supplier is based on what the buyer wants to achieve i.e. depends on the criteria set when soliciting for the proposals.

After selecting the supplier, the buyer negotiates the final order, listing the technical specifications; the quantity needed, the expected time of delivery, return policies and so on.

Performance review of the retained supplier is very vital, if they are not giving the services as stipulated in the contract then it would be ideal to drop them. Feedback can be received from end-users. The buyer may contact the end users through their evaluation.

I do strongly think that understanding the buying decision process will enable companies to align their marketing strategies accordingly.

Chapter 7

Segmentation can be done either by looking at the descriptive characteristic: geographic, demographic and psychographic, or, at behavioral trends such as consumer responses to benefits, usage occasions, or brands. Regardless of the type of segmentation used, the key is adjusting the marketing program to recognize customer differences.

Geographic Segmentation

Geographic segmentation divides the market into geographical units such as nations, cities, neighborhoods. The company can operate in one or a few areas or it can operate in all but pay attention to local variations. It can tailor market programs according to the needs and wants of local customer groups in trading areas, neighborhoods even individual stores.

Demographic Segmentation

One common way of segmenting a market is through the use of demographics. Demographics are quantitative characteristics of a group of people. These characteristics might include sex, age, income or geography (where they live). Businesses that segment their market based on demographics are attempting to target specific market segments that are more likely to be interested in what they have to offer. The cosmetics industry, for example, primarily targets women. The hunting industry might be more likely to target men. Luxury car makers target their markets based on income. Marketers are likely to consider multiple demographic characteristics when segmenting their consumer markets.

Psychographic Segmentation

Psychographics are qualitative attributes of a market and refer to the way people think and what they like to do. Psychographics are personal attributes related to personality, values, attitudes, interests, or lifestyles.

Takeaway

The more segments that marketers are able to identify and combine to specifically target groups of individuals most likely to be interested in what they have to offer, the more effective--and cost effective--their marketing efforts can be. Toward this end, businesses attempt to learn as much as they can about their customers--where they live, their age, their income levels, what they purchase, what their hobbies are and what their likes and dislikes are. This information can then be used to target these customers by reaching out to non-customers who share similar traits and characteristics.