Understanding Consumer

and Business Markets

Chapter 5
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
 The consumer market
 Geographic distribution, frequently
divided into rural, urban, and
suburban.
 Demographics, the vital statistics that
describe a population. In particular:
• Age.
• Gender.
• Family life cycle.
• Education.
• Income distribution.
• Ethnicity.
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Slides prepared by Joe Rosagrata
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5-2
 Family life cycle
 Family life cycle will determine the
purchase behaviour of individuals
and reason for purchase.
 Single parent and two-parent family.
 Young couples no children.
 Family (usually two adults, two
young children).
 Family with teenagers.
 Multi-cultural (or mixed) family.
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 Situational influences
 Situational influences are the temporary
forces associated with the immediate
purchase environment that affect
behaviour
• When consumers buy—the time
influence. (day, week, season).
• Where consumers buy—the place a
decision is made (home, point of
purchase).
• How consumers buy—the way in
which consumers buy (bulk etc).
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
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 SOCIAL AND PSYCHOLOGICAL
GROUP FORCES FORCES
Culture Motivation
Subculture Perception
Social class Learning
Reference groups Personality
Family and households Attitude

SITUATIONAL
FACTORS
BUYING-DECISION PROCESS When consumers
INFORMATION buy
Need recognition Where
Commercial consumers buy
sources Identification of alternatives

Evaluation of alternatives Why consumers

buy
Purchase and related decisions Conditions
Social sources under which
Post-purchase behaviour consumers buy

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Slides prepared by Joe Rosagrata
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Consumer buying behaviour
influences
 There are five main Buying Behaviour
factors which influence consumer’s
decision-making.
• Motivation.
• Perception.
• Learning.
• Personality.
• Self-concept.

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Consumer buying behaviour
influences (cont.)

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5-7
Four demand characteristics that
differentiate the business market from the
consumer market
 Demand is derived from the demand for
the ultimate consumer products in which
the business product is finally used (e.g.
steel).
 In the short run demand is inelastic, that
is, demand for a product responds very
little to changes in price when:
• The cost of a single part or material is
a small portion of the total cost of the
finished product.
• If the part or material has no
substitute.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
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Copyright © 1997 by The McGraw-Hill Companies, Inc.
 Four demand characteristics that
differentiate the business market from
the consumer market (cont.)
 Demand is widely fluctuating, meaning
that demand for most classes of
business goods fluctuates considerably
more than the demand for consumer
products.

 The buyers are well informed and know

the relative merits of alternative
sources of supply and competitive
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products.Slides prepared by Joe Rosagrata 5-9
Influences on business-market
demand

 The number and types of potential

business users.
 Their buying power,
 buying motives,
 and buying habits.

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Slides prepared by Joe Rosagrata
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Key differences between the
business market (BM) and
consumer (CM) market
 Small number of BMs.

 BMs have larger purchasing power and

buy in quantity.

 BMs are concentrated. CMs are not.

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Slides prepared by Joe Rosagrata
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Key differences between
the business market (BM) and
consumer (CM) market (cont.)
 Sellers deal direct with business
users.
 BMs are usually regionally
concentrated.
 BMs can be vertically or horizontally
concentrated.
 BM’s buying motives are rational and
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
purchase is methodical and objective.
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5-12
 Types of buying situations
1. New task
 New purchase or product category.
 More people involved in new
purchase.
 Extensive information must be
collected and evaluated on alternative
products.
 Seller displays creative selling ability
in satisfying buyer needs.
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Types of buying situations
(cont.)
2. Straight re-buy
 Information needs are minimal
 There is no great consideration of
alternatives.
 Buying decision made in the purchasing
department e.g. purchasing of office
supplies.

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Types of buying situations
(cont.)

3. Modified re-buy
 Situation in which the buyer wants to
change (modify) the product
specifications, price, terms, or suppliers.

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The buying centre
 A Buying Centre is all the individuals
who play a part in the various buying roles
and who influence buying decisions,
determine product specification and make
the buying decision
• Users—people who actually use the
good or service.
• Influencers—people who set the
specifications of, and help determine
aspects of the buying decision
because of their expertise, financial
position, or political power.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
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Types of buying situations
(cont.)
 Deciders—the people who make the
actual buying decision regarding the
product and supplier.
 Gatekeepers—people who control the
flow of purchasing information within
the organisation, as well as between
the firm and potential vendors.
 Buyers—people who select the
suppliers, arrange the terms of the
sale and process the actual purchase
orders.
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Slides prepared by Joe Rosagrata
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Buying patterns of business
users
 Direct purchase.
 Frequency of purchases.
 Size of order.
 Length of negotiated period.
 Reciprocity arrangements.
 Service expectations.
 Dependability of supply.
 Leasing instead of buying.
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5-18