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1 a) Define Marketing.

Distinguish product marketing and services marketing with


suitable examples.

Marketing is an integrated communications-based process through which individuals and communities


discover that existing and newly-identified needs and wants may be satisfied by the products and services
of others.

Marketing is defined by the American Marketing Association as the activity, set of institutions, and
processes for creating, communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large. [1] The term developed from the original meaning which
referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services.

The Chartered Institute of Marketing, which is the world's largest marketing body[citation needed], defines
marketing as "The management process responsible for identifying, anticipating and satisfying customer
requirements profitably."[2]

Marketing practice tended to be seen as a creative industry in the past, which included advertising,
distribution and selling. However, because marketing makes extensive use of social sciences, psychology,
sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely
recognized a science, allowing numerous universities to offer Master-of-Science (MSc) programmes. The
overall process starts with marketing research and goes through market segmentation, business planning
and execution, ending with pre and post-sales promotional activities. It is also related to many of the
creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according
to the times and the culture.

Services marketing

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Services marketing is marketing based on relationship and value. It may be used to market a service or
a product.
Marketing a service-base business is different from marketing a goods-base business.
There are several major differences, including:

1. The buyer purchases are intangible


2. The service may be based on the reputation of a single person
3. It's more difficult to compare the quality of similar services
4. The buyer cannot return the service

The major difference in the education of services marketing versus regular marketing is that instead of the
traditional "4 P's," Product, Price, Place, Promotion, there are three additional "P's" consisting of People,
Physical evidence, and Process.[1] Service marketing also includes the servicewomen referring to but not
limited to the aesthetic appearance of the business from the outside, the inside, and the general
appearance of the employees themselves. Service Marketing has been relatively gaining ground in the
overall spectrum of educational marketing as developed economies move farther away from industrial
importance to service oriented economies. What is marketing? Marketing is the flow of goods and
services from the producer to consumer. It is based on relationship and value. In common parlance it is the
distribution and sale of goods and services. Marketing can be differentiated as:

• Marketing of products

• Marketing of services.

Marketing includes the services of all those indulged may it be then the wholesaler retailer, Warehouse
keeper, transport etc. In this modern age of competition marketing of a product or service plays a key role.
It is estimated that almost 50% of the price paid for a commodity goes to the marketing of the product in
US. Marketing is now said to be a term which has no particular definition as the definitions change
everyday.
"Managing the evidence" refers to the act of informing customers that the service encounter has been
performed successfully. It is best done in subtle ways like providing examples or descriptions of good and
poor service that can be used as a basis of comparison. The underlying rationale is that a customer might
not appreciate the full worth of the service if they do not have a good benchmark for comparisons.
However, it is worth remembering that many of the concepts, as well as many of the specific techniques,
will work equally well whether they are directed at products or services. In particular, developing a
marketing strategy is much the same for products and services, in that it involves selecting target markets
and formulating a marketing mix. Thus, Theodore Levitt suggested that "instead of talking of 'goods' and
of 'services', it is better to talk of 'tangibles' and 'intangibles'"[2]. Levitt also went on to suggest that
marketing a physical product is often more concerned with intangible aspects (frequently the `product
service' elements of the total package) than with its physical . sales after service is very imporatant in
service sector. properties. Charles Revson made a famous comment regarding the business of Revlon Inc.:
`In the factory we make cosmetics. In the store we sell hope.' Arguably, service industry marketing merely
approaches the problems from the opposite end of the same spectrum[3].

b) How would you reply to the small business person who says, “Marketing Research is too
expensive, so the firm will just have to get by without it’?

In a world where perception is everything, businesses often think that professional Marketing Research is
too expensive. Now, who can argue with perception, let alone Marketing budgets, most of them on shaky
ground these days? In today’s economy, a business could easily argue against expensive luxury services
like Marketing Research. Still, as I hear from business leaders about their woes in this time of fiscal crisis,
my reaction is “expensive compared with what?”

The Marketing Analysts offers a broad line of inexpensive marketing services that have traditionally been
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more reliable results. Further, we can offer prices that even small businesses can afford because we can
capitalize on advanced technological and proprietary marketing software technologies that our
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2 a) What are the steps in the consumer decision making process? Do all consumers
decisions involve these steps.

Buyer decision processes are the decision making processes undertaken by consumers in regard to a
potential market transaction before, during, and after the purchase of a product or service.

More generally, decision making is the cognitive process of selecting a course of action from among
multiple alternatives. Common examples include shopping, deciding what to eat. Decision making is said
to be a psychological construct. This means that although we can never "see" a decision, we can infer from
observable behaviour that a decision has been made. Therefore we conclude that a psychological event
that we call "decision making" has occurred. It is a construction that imputes commitment to action. That
is, based on observable actions, we assume that people have made a commitment to effect the action.

In general there are three ways of analysing consumer buying decisions. They are:

• Economic models - These models are largely quantitative and are based on the
assumptions of rationality and near perfect knowledge. The consumer is seen to
maximize their utility. See consumer theory. Game theory can also be used in some
circumstances.

• Psychological models - These models concentrate on psychological and cognitive


processes such as motivation and need recognition. They are qualitative rather than
quantitative and build on sociological factors like cultural influences and family
influences.

• Consumer behaviour models - These are practical models used by marketers. They
typically blend both economic and psychological models.

Nobel laureate Herbert Simon sees economic decision making as a vain attempt to be rational. He claims
(in 1947 and 1957) that if a complete analysis is to be done, a decision will be immensely complex. He also
says that peoples' information processing ability is very limited. The assumption of a perfectly rational
economic actor is unrealistic. Often we are influenced by emotional and non-rational considerations. When
we try to be rational we are at best only partially successful.

Models of buyer decision making

In an early study of the buyer decision process literature, Frank Nicosia (Nicosia, F. 1966; pp 9-21)
identified three types of buyer decision making models. They are the univariate model (He called it the
"simple scheme".) in which only one behavioural determinant was allowed in a stimulus-response type of
relationship; the multi-variate model (He called it a "reduced form scheme".) in which numerous
independent variables were assumed to determine buyer behaviour; and finally the "system of equations"
model (He called it a "structural scheme" or "process scheme".) in which numerous functional relations
(either univariate or multi-variate) interact in a complex system of equations. He concluded that only this
third type of model is capable of expressing the complexity of buyer decision processes. In chapter 7,
Nicosia builds a comprehensive model involving five modules. The encoding module includes determinants
like "attributes of the brand", "environmental factors", "consumer's attributes", "attributes of the
organization", and "attributes of the message". Other modules in the system include, consumer decoding,
search and evaluation, decision, and consumption.

[edit] General model

A general model of the buyer decision process consists of the following steps:

1. Problem recognition;
2. Gathering Information
3. Alternative education
4. Purchase decision
5. Post-purchase behavior/buyer's remorse (cognitive dissonance)

There are a range of alternative models, but that of AIUAPR, which most directly links to the steps in the
marketing/promotional process is often seen as the most generally useful[1];

• AWARENESS - before anything else can happen the potential customers must become
aware that the product or service exists. Thus, the first task must be to gain the
attention of the target audience. All the different models are, predictably, agreed on this
first step. If the audience never hears the message, they will not act on it, no matter
how powerful it is.

• INTEREST - but it is not sufficient to grab their attention. The message must interest
them and persuade them that the product or service is relevant to their needs. The
content of the message(s) must therefore be meaningful and clearly relevant to that
target audience's needs, and this is where marketing research can come into its own.

• UNDERSTANDING - once an interest is established, the prospective customer must be able


to appreciate how well the offering may meet his or her needs, again as revealed by the
marketing research. This may be no small achievement where the copywriter has just
fifty words, or ten seconds, to convey everything there is to say about it.

• ATTITUDES - but the message must go even further; to persuade the reader to adopt a
sufficiently positive attitude towards the product or service that he or she will purchase
it, albeit as a trial. There is no adequate way of describing how this may be achieved. It
is simply down to the magic of the copywriter's art, or based on the strength of the
product or service itself.

• PURCHASE - all the above stages might happen in a few minutes while the reader is
considering the advertisement; in the comfort of his or her favourite armchair. The final
buying decision, on the other hand, may take place some time later; perhaps weeks
later, when the prospective buyer actually tries to find a shop which stocks the product.

• REPEAT PURCHASE - but in most cases this first purchase is best viewed as just a trial
purchase. Only if the experience is a success for the customer will it be turned into
repeat purchases. These repeats, not the single purchase which is the focus of most
models, are where the vendors focus should be, for these are where the profits are
generated. The earlier stages are merely a very necessary prerequisite for this!

This is a very simple model, and as such does apply quite generally. Its lessons are that you cannot obtain
repeat purchasing without going through the stages of building awareness and then obtaining trial use;
which has to be successful. It is a pattern which applies to all repeat purchase products and services;
industrial goods just as much as baked beans. This simple theory is rarely taken any further - to look at the
series of transactions which such repeat purchasing implies. The consumer's growing experience over a
number of such transactions is often the determining factor in the later - and future - purchases. All the
succeeding transactions are, thus, interdependent - and the overall decision-making process may
accordingly be much more complex than most models allow for.[2]

[edit] Cognitive and personal biases in decision making

It has been suggested that this article or section be merged into List of
cognitive biases. (Discuss)
It is generally agreed that biases can creep into our decision making processes, calling into question the
correctness of a decision. Below is a list of some of the more common cognitive biases.

• Selective search for evidence - We tend to be willing to gather facts that support certain
conclusions but disregard other facts that support different conclusions.

• Premature termination of search for evidence - We tend to accept the first alternative
that looks like it might work.

• Conservatism and inertia - Unwillingness to change thought patterns that we have used
in the past in the face of new circumstances.

• Experiential limitations - Unwillingness or inability to look beyond the scope of our past
experiences; rejection of the unfamiliar.

• Selective perception - We actively screen-out information that we do not think is salient.

• Wishful thinking or optimism - We tend to want to see things in a positive light and this
can distort our perception and thinking.

• Recency - We tend to place more attention on more recent information and either ignore
or forget more distant information.

• Repetition bias - A willingness to believe what we have been told most often and by the
greatest number of different of sources.

• Anchoring - Decisions are unduly influenced by initial information that shapes our view
of subsequent information.

• Group think - Peer pressure to conform to the opinions held by the group.

• Source credibility bias - We reject something if we have a bias against the person,
organization, or group to which the person belongs: We are inclined to accept a
statement by someone we like.

• Incremental decision making and escalating commitment - We look at a decision as a


small step in a process and this tends to perpetuate a series of similar decisions. This
can be contrasted with zero-based decision making.

• Inconsistency - The unwillingness to apply the same decision criteria in similar


situations.
• Attribution asymmetry - We tend to attribute our success to our abilities and talents, but
we attribute our failures to bad luck and external factors. We attribute other's success
to good luck, and their failures to their mistakes.

• Role fulfillment - We conform to the decision making expectations that others have of
someone in our position.

• Underestimating uncertainty and the illusion of control - We tend to underestimate


future uncertainty because we tend to believe we have more control over events than
we really do.

• Faulty generalizations - In order to simplify an extremely complex world, we tend to


group things and people. These simplifying generalizations can bias decision making
processes.

• Ascription of causality - We tend to ascribe causation even when the evidence only
suggests correlation. Just because birds fly to the equatorial regions when the trees lose
their leaves, does not mean that the birds migrate because the trees lose their leaves.

how to print notes

Consumer behavior
The actions a person takes in purchasing and using
products and services,
including the mental and social processes that
precede and follow these actions.
The behavioral sciences help answer questions
such as :
Why people choose one product or brand over
another,
How they make these choices, and
How companies use this knowledge to provide
value to consumers

I. CONSUMER PURCHASE DECISION PROCESS

o Behind the visible act of making a purchase lies a decision process that must be investigated.

o The purchase decision process is the stages a buyer passes through in making choices about w

Five Stages 1. problem recognition,


of
2. information
Consumer
search,
3. alternative
evaluation,
4. purchase decision,
Behavior
and

5. post-purchase behavior.

A. Problem Recognition: Perceiving a Need

o Perceiving a difference between a person's ideal and actual situations big enough to trigger a

o Can be as simple as noticing an empty milk carton or it can be activated by marketing efforts.

B. Information Search: Seeking Value

The information search stage clarifies the options open to the consumer and may involve

o Scanning one’s memory to recall previous


Internal or brands.
search
o Often sufficient for frequently purchased p

o When past experience or knowledge is ins

o The risk of making a wrong purchase decis

two steps of information


search
o The cost of gathering information is low.

The primary sources of external information are:


External
search 1. Personal sources, such as friends and fam

2. Public sources, including various product-r


Consumer Reports.

3. Marketer-dominated sources, such as adve


and salespeople
C. Alternative Evaluation: Assessing Value

The information search clarifies the problem for the consumer by

(1) Suggesting criteria to use for the purchase.

(2) Yielding brand names that might meet the criteria.

(3) Developing consumer value perception.

o A consumer's evaluative criteria represent both

 the objective attributes of a brand (such as locate speed on a portable CD player)

 the subjective factors (such as prestige).


o These criteria establish a consumer's evoked set

 the group of brands that a consumer would consider acceptable from among all the br
she is aware

D. Purchase Decision: Buying Value

Three From whom to o which depends on such conside


possibilities buy
 Terms of sale

 Past experience buying


seller

 Return policy.

o which can be influenced by

 store atmosphere

 time pressure
When to buy a sale

 pleasantness of the sho


experience.

Do not buy

E. Postpurchase Behavior: Value in Consumption or Use

o After buying a product, the consumer compares it with expectations and is either satisfied or d

o Satisfaction or dissatisfaction affects

 consumer value perceptions

 consumer communications

 repeat-purchase behavior.
o Many firms work to produce positive postpurchase communications among consumers and con
sellers and buyers.
o Cognitive Dissonance. The feelings of postpurchase psychological tension or anxiety a consum

o Firms often use ads or follow-up calls from salespeople in this postpurchase stage to try to con
decision.

F. Involvement and Problem-Solving Variations


o Consumers may skip or minimize one or more steps in the purchase decision process dependin

 the level of involvement

 the personal, social, and economic significance of the purchase


o Three characteristics of high-involvement purchase

11 is expensive,

11 can have serious personal consequences, or

11 could reflect on one’s social image.

Three general problem-solving variations exist in the consumer purchase decision process:

o Virtually a habit

o involves little effort seeking external information and evaluating a


Routine Problem Solving

o Typically used for low-priced, frequently purchased products.

o Involves the use of moderate information-seeking efforts.


Limited Problem Solving
o Often used when the buyer has little time or effort to spend.

Extended Problem o Each stage of the consumer purchase decision process is used
Solving
o Considerable time and effort on

11 external information search and in identifying

11 evaluating alternatives.
o Used in high-involvement purchase situations.

Involvement and o Low and high consumer involvement has important implications fo
Marketing Strategy products that are market leaders from their challengers.

G. Situational Influences

The purchase
The reason for engaging in the decision.
task
Social Including others present when a purchase
Five
surroundings decision is made.
situatio
Physical Such as decor, music, and crowding in retail
nal
surroundings stores.
influenc
Such as time of day or the amount of time
es Temporal effects
available.
Antecedent Which include the consumer’s mood or amount of
states cash on hand

1
II. PSYCHOLOGICAL INFLUENCES ON CONSUMER BEHAVIOR
Concepts such as motivation and personality; perception; learning; values, beliefs and attitudes; and lifestyle are use
directing marketing efforts.
A. Motivation and Personality

1. Motivation

o is the energizing force that causes behavior that satisfies a need.

o Needs are hierarchical

o Once basic physiological needs are met, people seek to satisfy learned needs.

Physiological o basic to
needs survival.
o self-
preservation
Safety needs
o physical wel
being.

From lowest to highest, the o love

hierarchy is: o friendship.

o achievemen
Social needs o status

o prestige

o self-respect.

Self-actualization o personal
needs fulfillment.
2. Personality
o A person's consistent behavior or responses to recurring situations.

o Research suggests that key traits affect brand and product-type preferences.

o Cross-cultural analysis also suggests that residents of different countries have a national character, o
characteristics common among people of a country or society.
o Personality characteristics are often revealed in a person’s self-concept, which is the way people see
others see them.
B. Perception

o The process by which an individual uses information to create a meaningful picture of the world by

11 selecting,

11 organizing

11 interpreting

o Perception is important because people selectively perceive what they want and it affects how people

1. Selective Perception

o Filtering

11 exposure,

11 comprehension, and
Selective perception
11 retention

o in the human brain’s attempt to organize and interpret infor

o Consumers can pay attention to messages that are consisten


attitudes and beliefs
Selective exposure

o Consumers can ignore messages that are inconsistent.

Selective o Involves interpreting (distorting?) information so that it is co


comprehension person's attitudes and beliefs.
Selective retention o Consumers do not remember all the information they see, re

o Consumers see or hear messages without being aware of the

Subliminal o This is a hotly debated issue with more popular appeal than
perception

o Research suggests that such messages have limited effects

2. Perceived Risk
o Anxieties felt

11 Consumes cannot anticipate the outcomes of a purchase

11 Believe that there may be negative consequences.


o Marketers try to reduce a consumer's perceived risk and encourage purchases by strategies such as p

11 Free trial of a product

11 Securing endorsements from influential people


11 Providing warranties and guarantees.

C. Learning

o Those behaviors that result from

11 Repeated experience

11 Thinking.

1. Behavioral Learning

o The process of developing automatic responses to a situation built up

o through repeated exposure to it.

Four variables central to how consumers


learn from repeated experience are:

A need that moves an individual to


drive
action

A stimulus or symbol perceived by


cue
consumers

The action taken by a consumer to


response
satisfy the drive.

reinforcem
The reward.
ent

Marketers use two concepts from behavioral learning theory:


Stimulus o Occurs when a response elicited by one stimulus (cue) is ge
generalization another.

o 1Using the same brand name for different products is an ap


this concept
Stimulus o Refers to a person's ability to perceive differences in stimuli
discrimination

o The advertising for Bud Light beer is an example of this conc

2. Cognitive learning
o Involves making connections between two or more ideas

o or simply observing the outcomes of others’ behaviors

o and adjusting one's accordingly.

3. Brand loyalty

o Is a favorable attitude and consistent purchase of a single brand over time.

o Brand loyalty differs across countries

D. Values, Beliefs, and Attitudes

1. Attitude Formation
o A learned predisposition to respond to an object or class of objects in a consistently
Attitu favorable or unfavorable way.
de
o Shaped by our values and beliefs, which are learned.

Value o personally or socially preferable modes of conduct or states of existence that are
s enduring.

Belief o consumer's subjective perception of how well a product or brand performs on different
s attributes.

2. Attitude Change

Approaches o Changing beliefs about the extent to which a brand

to try to certain attributes.


change o Changing the perceived importance of attributes.
consumer
attitudes o Adding new attributes to the product.

E. Lifestyle

Lifestyle is a mode of living that is identified by

activiti
How a person spends time and resources
es

interes What a person considers important in the


ts environment

opinio
what a person thinks of self and the world
ns

o Psychographics

11 The analysis of consumer lifestyle

11 helps to segment and target consumers for new and existing products.

Values and Lifestyles (VALS) Program

o Developed by SRI International

o Identified eight interconnected categories of adult lifestyles

o based on a person’s self-orientation and resources.

Self-orientation Resources

o income

o Three patterns of attitudes and activities that help people reinforce o education

their social self-image. o self-

o The three patterns are oriented toward confidence


o health
11 principles,
o eagerness to
11 status,
buy
o intelligence
11 action.

o energy level.
1
III. SOCIOCULTURAL INFLUENCES ON CONSUMER BEHAVIOR
o Sociocultural influences evolve from a formal and informal relationships with other people.

o Influences Include

11 Personal influence

11 Reference groups

11 The family

11 Social class

11 Culture

11 Subculture.
A. Personal Influence

Opinion o individuals who exert direc


leaders over others

Aspects of personal influence important o People influencing each ot

to marketing conversations.
Word of
mouth
o Power of word of mouth ha
Internet and e-mail

B. Reference Groups
Reference groups are people to whom an individual looks as a basis for self-appraisal or as a source of person
important influence on the purchase of luxury products but not of necessities. :

Membership
o one to which a person actually belongs
group

Three groups have clear marketing Aspiration


o one with which a person wishes to be id
implications group

Dissociative o one from which a person wants to main


group in values or behaviors

C. Family Influence
o Family influences on consumer behavior result from three sources:

11 consumer socialization

11 passage through the family life cycle

11 decision making within the family.

Consumer Consumer socialization is the process by which people acquire the skills, knowledge, and attit
Socialization consumers

Family Life o The distinct phases that a family progresses through from formation to
Cycle retirement
o Each phase bringing with it identifiable purchasing behaviors.

Fiv
o Two decision-making styles exist: th

11 spouse-dominant (either wife or husband is responsible)


Family 11 joint decision making (most decisions are made by both
Decision husband and wife).
Making

o Increasingly, preteens and teenagers are assuming these roles for the
family, given the prevalence of working parents and single-parent households.

D. Social Class
o The relatively permanent, homogeneous divisions in a society into which people sharing simila
grouped.
o Determinants of social class include

11 occupation,

11 source of income (not level of income)

11 education.

o Social class is a basis for identifying and reaching particularly good prospects for products and

11 Upper classes are targeted by companies for items such as financial investments, exp

11 Middle classes represent a target market for home improvement centers and

11 Lower classes are targeted for products such as sports and scandal magazines.
E. Culture and Subculture
Culture refers to the set of values, ideas and attitudes that are accepted by a homogeneous group of people a
o Subcultures - groups within the larger, or national, culture with unique values, ideas, and attit

o three largest racial/ethnic subcultures in the U.S

11 Hispanics,

11 African-Americans

11 Asians .

o Each of these groups exhibits sophisticated social and cultural behaviors that affect their buyi

1. African-American Buying Patterns


o African-Americans have the largest spending power of the three subcultures

o While price conscious, they are motivated by product quality and choice.

o Respond to products and advertising that appeal to their African-American pride and heritage
and needs.
2. Hispanic Buying Patterns
o Hispanics represent the largest subculture

o About 50% are immigrants

o The majority are under the age of 25.

o Marketing to Hispanics has proven to be a challenge because

11 The diversity of this subculture

11 The language barrier.

o Sensitivity to the unique needs of Hispanics by firms has paid huge dividends.

3. Asian Buying Patterns


o The Asian is the fastest growing subculture.

o About 70% of Asians are immigrants

o Most are under the age of 30.

o Asians represent a diverse subculture, including Chinese, Japanese, Filipinos, Koreans, Asian-I
Pacific Islanders.
o Two groups of Asian-Americans have been identified:

11 Assimilated Asians are

 conversant in English

 highly educated

 exhibit buying patterns very much like "typical" American consumers.

11 Nonassimilated Asians

 recent immigrants who cling to their native languages and customs.

b) Discuss the role of personal selling and advertising in promoting industrial


products. How does it compare to consumer product promotion.

Industrial marketing is the marketing of goods and services from


one business to another. Industrial goods are those which are used in
Industry for producing a Different end product from one or more
rawmaterials. The word "industrial" means machinery run by power to
produce goods and services. But "industrial marketing" is not confined
to these types of business activities. Broadly, marketing could be split
into consumer marketing (B2C "Business to Consumer") and industrial
marketing (B2B "Business to Business").

Conten
ts
[show]

[edit] B2B Business to Business (or


"Industrial")
Typical examples of a B2B selling process are...

• An organization is seeking to build a new warehouse building. After carefully


documenting their requirements, it obtains three proposals from suitable construction
firms and after a long process of evaluation and negotiation it places an order with the
organization that it believes has offered the best value for money.

• An organization has significant need for legal services and obtains submissions from two
law firms. Analysis of the proposals and subsequent discussions determines that there is
no price advantage to placing all of the work with one firm and the decision is made to
split the work between the two firms based on an evaluation of each firm's capabilities.

• A sales representative makes an appointment with a small organization that employs 22


people. He demonstrates a photocopier/fax/printer to the office administrator. After
discussing the proposal with the business owner it is decided to sign a contract to obtain
the machine on a fully maintained rental and consumables basis with an upgrade after 2
years.

The main features of the B2B selling process are...

• Marketing is one-to-one in nature. It is relatively easy for the seller to identify a


prospective customer and to build a face-to-face relationship.

• Highly professional and Trained people in Buying processes are involved.In many cases
two or three decision makers have to be considered in purchasing industrial products.

• High value considered purchase.

• Purchase decision is typically made by a group of people ("buying team") not one
person.

• Often the buying/selling process is complex and includes many stages (for example;
request for expression of interest, request for tender, selection process, awarding of
tender, contract negotiations, and signing of final contract).

• Selling activities involve long processes of prospecting, qualifying, wooing, making


representations, preparing tenders, developing strategies and contract negotiations.

See also B2B definition.

[edit] B2C Business to Consumer (or


"Consumer")
Examples of the B2C selling/buying process are...

• A family are at home on a Sunday night and are watching television. An advertisement
appears that advertises home delivered pizza. The family decides to order a pizza.

• Walking down a supermarket aisle, a single man aged in his early 30's sees a hair care
product that claims to reduce dandruff. He pick's the product and adds it to his shopping
cart.

• A pensioner visits her local shopping mall. She purchases a number of items including
her favourite brand of tea. She has bought the same brand of tea for the last 18 years.

The main features of the B2C selling process are...

• Marketing is one-to-many in nature. It is not practical for sellers to individually identify


the prospective customers nor meet them face-to-face.

• Lower value of purchase.

• Decision making is quite often impulsive (spur of the moment) in nature.

• Greater reliance on distribution (getting into retail outlets).

• More effort put into mass marketing (One to many).

• More reliance on branding.

• Higher use of main media (television, radio, print media) advertising to build the brand
and to achieve top of mind awareness.

See also B2C definition.

[edit] Blurring between the definitions


As in all things, the definitions are not clear cut. For example, an
organisation that sells electronic components may seek to distribute its
products through marketing channels (see channel (marketing)), and
be selling relatively low value products. However, the final purchaser is
still a business. Equally there are big ticket items purchased by non-
business consumers (houses and motor vehicles being the obvious
examples). However, even though these definitions are blurred, sales
and marketing activities aimed at B2B are distinctly different from B2C
(as outlined above).

[edit] Competitive tendering


Industrial marketing often involves competitive tendering (see tender,
tendering). This is a process where a purchasing organisation
undertakes to procure goods and services from suitable suppliers. Due
to the high value of some purchases (for example buying a new
computer system, manufacturing machinery, or outsourcing a
maintenance contract) and the complexity of such purchases, the
purchasing organisation will seek to obtain a number of bids from
competing suppliers and choose the best offering. An entire profession
(strategic procurement) that includes tertiary training and
qualifications has been built around the process of making important
purchases. The key requirement in any competitive tender is to ensure
that...

• The business case for the purchase has been completed and approved.

• The purchasing organisation's objectives for the purchase are clearly defined.

• The procurement process is agreed upon and it conforms with fiscal guidelines and
organisational policies.

• The selection criteria have been established.

• A budget has been estimated and the financial resources are available.

• A buying team (or committee) has been assembled.

• A specification has been written.

• A preliminary scan of the market place has determined that enough potential suppliers
are available to make the process viable (this can sometimes be achieved using an
expression of interest process).

• It has been clearly established that a competitive tendering process is the best method
for meeting the objectives of this purchasing project. If (for example) it was known that
there was only one organisation capable of supplying; best to get on with talking to
them and negotiating a contract.

Because of the significant value of many purchases, issues of probity


arise. Organisations seek to ensure that awarding a contract is based
on "best fit" to the agreed criteria, and not bribery, corruption, or
incompetence.

[edit] Bidding process


Suppliers who are seeking to win a competitive tender go through a
bidding process. At its most primitive, this would consist of evaluating
the specification (issued by the purchasing organization), designing a
suitable proposal, and working out a price. This is a "primitive"
approach because...

• There is an old saying in industrial marketing; "if the first time you have heard about a
tender is when you are invited to submit, then you have already lost it."

• While flippant, the previous point illustrates a basic requirement for being successful in
competitive tendering; it is important to develop a strong relationship with a
prospective customer organization well before they have started the formal part of their
procurement process.

(more needed)

[edit] Non-tender purchasing


Not all industrial sales involve competitive tendering. Tender processes
are time consuming and expensive, particularly when executed with
the aim of ensuring probity. Government agencies are particularly
likely to utilise elaborate competitive tendering processes due to the
expectation that they should be seen at all times to be responsibly and
accountably spending public monies. Private companies are able to
avoid the complexity of a fully transparent tender process but are still
able to run the procurement process with some rigour.

[edit] Developing a sales


strategy/solution selling/technical
selling
The "art" of technical selling (solution selling) follows a three stage
process...

• Stage 1: Sell the appointment: Never sell over the telephone. The aim of the first contact
with a propsective purchaser is to sell the appointment. The reason is simple; industrial
sales are complex, any attempt to sell over the phone will trivialise your product or
service and run the risk of not fully understanding the customer's need.

• Stage 2: Understand their needs: The best method of selling is to minimise the
information about your goods or services until you have fully understood your
customer's requirements.

• Stage 3: Develop and propose a solution. The solution is (of course) developed from your
(or the firm that you represent's) product or service offerings.

The important point about solution selling is that it is essential not to


sell the solution before you understand the customer's requirements;
otherwise you are highly likely to unwittingly sell them on how ill-suited
your solution is to meeting their requirements. To illustrate; imagine a
couple seeking the services of an architect start their first meeting with
the inevitable "we want to build a house." If the architect leapt in at
that point and proceeded to show them his favourite design influence
"the Mediterranean look" only to discover that they hate
"Mediterranean" and wanted something "a bit more Frank Lloyd
Wright" he will have gone most of the way toward alienating the sale.
You can see that if he had "kept his powder dry" for a bit longer and
first discovered what they were looking for, he could have better
understood which way to skew his pitch. He was equally capable of
designing in a Frank Lloyd Wright style.
The marketing function is able to support this solution sell through
tactics like account-based marketing – understanding the requirements
of a specific target organization and building a marketing program
around these. As research shows, sales success is heavily weighted
towards suppliers who can understand their audience before selling to
them (in UK research, 77 per cent of senior decision-makers believe
that the marketing approaches made by new suppliers are poorly
targeted and make it easy to justify staying with their current supplier)
[1]
.
Sales force management has a critical function in industrial selling,
where it assumes a greater role than other parts of the marketing mix.
Typical industrial organisations are highly dependent on the ability of
its sales people to build relationships with customers. During periods of
high demand (economic boom) the sales force often become mere
order takers and struggle to respond to customer requests for
quotations and information. However, when economic downturn hits it
becomes critical to direct the sales force out selling.

[edit] From cannon fodder to preferred


tenderer
The term "cannon fodder" derives from the World Wars and refers to
the massing of undertrained and recently recruited troops sent to the
fronts to face the enemy. It was noted that such troops invariably had
a short survival rate but provided the tactical advantage of distracting
the enemy while professional soldiers mounted a flanking manoeuvre
and came around from the side or from behind the enemy. In adopting
the term to Industrial Marketing it means those bids being submitted
that have no chance of winning but are involved to make up the
numbers (you can't have only one bid in a "competitive" tender
process; that wouldn't satisfy the requirements of probity (for example
in government tenders, or for private enterprise the requirement to
"truly test the market" and to "keep them honest"). The reader might
be wondering why anybody would go to all of the work of submitting a
tender when they had no chance of winning; for the same reason that
troops were sent in to battle to die; they thought they had a real
chance.
[edit] The key features of a successful
industrial sales organisation
In industrial marketing the personal selling is still very effective
because many products must be customized to suit the requirements
of the individual customer. Indicators such as the sales tunnel give
information on the expected sales in the near future, the hit rate
indicates whether the sales organization is busy with promising sales
leads or it is spending too much effort on projects that are eventually
lost to the competition or that are abandoned by the prospect.

[edit] The internet and B2B marketing


The "dotcom" boom and bust of the late 90's saw significant attempts
to develop a new retailing business model; on-line shopping. Many
entrepreneurs (and their investors) discovered that merely having a
website (no matter how innovative) was insufficient to generate sales;
the amount of conventional main media advertising required to
promote the sites burnt cash at a faster rate than they could generate
through on-line sales. They also presumed that consumers would
eschew the irksome shopping experience (driving, parking, poor
service etc.) for the wonder and convenience of shopping on-line.
Some did; but not in sufficient numbers. There were many unforeseen
problems and apart from some notable exceptions (Amazon.com and
others) the B2C online model was a spectacular failure. However, the
same cannot be said of B2B selling where some quite impressive
results have been achieved.

3 a) Why do many firms use a family brand? What are the risks associated with this
strategy if a new product is sub-standard?
Family branding is a MARKETING strategy that involves selling several related PRODUCTS under one BRAND
NAME. It is contrasted with individual branding in which each product in a portfolio is given a unique identity
and brand name.
There are often economies of scope associated with family branding since several products can efficiently be
promoted with a single advertisement or campaign. Family branding facilitates NEW PRODUCT
INTRODUCTIONS by providing a 'foot-in-the-door' in potential customers' evoked set. When considering
purchasing a new type of product, potential customers will tend to evoke in their minds a product with a
familiar brand name. Being a part of this evoked set could lead to trial purchase, product acceptance, or
other advantages.

-1) Brand image of parent brand act as Differentiating factor for product in extremely competitive market.
-2) Extra cost of Brand creation is not required.
-3) Umbrella branding help to create dependent perception about product as parent Brand.
-4) Brands get abound in business.
-5) Umbrella branding helps to give positioning to product.
-6) Advertising and promotional efforts should be combined for all the products falling under family brand.
-7) New product launch become easier and cheaper.
- 8) New product find ready recognition and market set up.

Family branding imposes on the brand owner a greater burden


-to maintain consistent quality and BRAND EQUITY .
-If the quality of one product in the brand family is compromised, it could reduce sales of all the others.
Family branding should only be done when a PRODUCT LINE consists of products of similar quality.

b) Consider the following statement and discuss: “The only thing that channel
intermediaries do is to increase price for the consumer.”

4 a) Discuss the stages in New Product Development process giving suitable examples

b) What is cyber marketing and how is it different from conventional marketing?


Discuss the limitations of cyber marketing.