CONSUMER

AND

BUSINESS BEHAVIOUR

S E S S I O N T H R E E

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Mostafa Purmehdi

H E C M O N T R E A L

Understanding Business Markets

O B J E C T I V E S

Business Markets

a r e t h e o r g a n i z a t i o n s t h a t

buy goods & services

t h a t t h e y u s e t o c r e a t e

THEIR OWN GOODS & SERVICES

CONSUMER

MARKET

BUSINESS

MARKET

ALIBABA

THE LARGEST E-COMMERCE IN THE WORLD

CREATE VALUE

FOR

CUSTOMERS

OF

CUSTOMERS

B U S I N E S S M A R K E T S

Consumer Markets

vs.

Business Markets

O B J E C T I V E S

B2B

Geographically concentrated markets
Few good customers
Demand structure is volatile, derived, and discontinuous

CONSUMER

Geographically dispersed markets
More customers, mass market
Demand structure is direct, elastic and less volatile, more stable

MARKET AND DEMAND STRUCTURE

DERIVED DEMAND - 1

297

Total number

of aircrafts

15

Aircrafts to be

replaced

Air Canada's demand increases 10%

297

Total number

of aircrafts

30

Aircrafts to be

replaced

DERIVED DEMAND - 2

+ 100%

Air Canada's demand decreases 10%

297

Total number

of aircrafts

0

Aircrafts to be

replaced

DERIVED DEMAND - 3

- 100%

W H A T I S

ELASTICITY

B2B

Technically complex
Bought for professional or industrial use
Service, delivery, and availability very important

CONSUMER

Generally standardized
Bought for personal use

PRODUCTS AND SERVICES

B2B

Professionals make the purchase
High buyer involvement
Various decision makers
Rational motivation

CONSUMER

Individual purchases
Individual or family level decision making
Motivation often social, psychological or emotional

BUYER BEHAVIOUR

B2B

Technically complex
Personal contact
Substantial information communication
Stable, long-term relationship

CONSUMER

Impersonal relationships
Little information communication
Generally short-term relationships

RELATION BETWEEN SELLER & BUYER

B2B

Short and direct channels
Sales-related communications
Price is negotiated or subject to bidding

CONSUMER

Long and indirect channels
Advertisements and mass communication drive communication
Generally fixed prices

MARKETING MIX ELEMENTS

Types of Organizational Customers

O B J E C T I V E S

GOVERN MENT

NON- FOR PROFIT

FOR PROFIT

Industrial distributors (wholesalers)
Value-added resellers
Original equipment manufacturers

Industrial Distributors

[ W H O L E S A L E R S ]

Wholesalers offer complete solutions from different manufacturers

Value-added Resellers

= $$$

GOVERN MENT

NON- FOR PROFIT

FOR PROFIT

$124 B

Annual Spending of

Federal Government

of Canada GDP

2003

IN

GOVERN MENT

NON- FOR PROFIT

FOR PROFIT

Types of Purchasing Situations

O B J E C T I V E S

Straight Rebuy

New Task

Modified Rebuy

Simple
Low risk

Complex
High risk

Straight Rebuy

when a consumer makes another purchase of the identical goods in the identical amount under the identical terms from the identical supplier.

[ Business Dictionary ]

Modified Rebuy

an individual or organization purchases goods that have been purchased previously but changes either the supplier or some other elements of the previous order e.g., product specifications, terms, prices, suppliers.

[ MBASkool ]

New Task

As the name suggests, these purchases are ones the buyer has never or rarely made before.

[ knowthis.com ]

Organizational

Buying Process

O B J E C T I V E S

DEFINE

NEED

SELECTION

PROCUREMENT

DELIVERY

POST

PURCHASE

EVALUATION

ROLES IN THE

BUYING PROCESS

Initiators
Influencers
Deciders
Buyers
Users
Gatekeeper

INITIATOR

INFLUENCER

DECIDER

BUYER

USERS

GATE -

KEEPER

CULTURAL INFLUENCE

I N B U S I N E S S M A R K E T S

Individualism
Social hierarchy
Uncertainty avoidance
Masculinity
Long-term orientation (LTO)

CULTURAL INFLUENCE

I N B U S I N E S S M A R K E T S

Individualism
Social hierarchy
Uncertainty avoidance
Masculinity
Long-term orientation (LTO)

The Hofstede Centre offers a range of cultural tools based on Hofstede’s research. Click to learn more..

Power Distance

problem of inequality

Uncertainty Avoidance

problem of dealing with unknown and unfamiliar

Individualism–Collectivism

problem of interpersonal ties

Masculinity–Femininity

emotional gender roles

Long- versus Short-Term Orientation

deferment of gratification

GLOBE

vs.

HOFSTEDE

Consumer Behviour

O B J E C T I V E S

HOW BRAIN WORKS

BASIC TRIAD

INDIVIDUAL

PRODUCT

SITUATION

INTERNAL

INFLUENCE

INTERNAL

INFLUENCE

INTERNAL

INFLUENCE

SITUATIONAL

INFLUENCE

EXTERNAL

INFLUENCE

PRODUCT OR SERVICE

Problem

Recognition

Purchase

Decision

Evaluation of

Alternatives

Information

Search

Post-prchse

Evaluation

Motivation, Perception, Learning, Attitudes, Personality, Age group, Lifestyle

Culture, Subculture, Social class, Reference group, Family

Environment, Time, Economy

Attributes, Price, Image, Distribution, Competitors

Motivation

Licence Standard YouTube Licence

Consumer's Buying Decision Process

O B J E C T I V E S

Problem

Recognition

Purchase

Decision

Evaluation of

Alternatives

Information

Search

Post-prchse

Evaluation

CONSUMER'S DECISION MAKING PROCESS

Problem

Recognition

Purchase

Decision

Evaluation of

Alternatives

Information

Search

Post-prchse

Evaluation

WHAT INFLUENCES

A CUSTOMER'S DECISION

INVOLVEMENT
EXPERIENCE
PROBLEM RECOGNITION
INFORMATION SEARCH
EVALUATION OF ALTERNATIVES
COGNITIVE PROCESSES

COGNITIVE PROCESSES

Linear compensatory model
Conjunctive model
Disjunctive model
Lexicographic model
Delegated processes
Affective processes
Habit
Impulse buying

Standards

Linear Model

Standards

Conjunctive Model

Standards

Disjunctive Model

and Lexicographic

Delegated Model

reference groups

Ashton Kutcher is famously the first Twitter user to reach one million followers

The Standard

immitation
recommendation
deference [respect]

16.6 M

Habits

Pavlov's Experiment

H A B I T S

Big Bang vs. Pavlov

Impulse Buying

Low involvement + little experience