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Week 2 ProjectAssignment Due August 31 at 12:59 AM The Buying Center Apply the buying center concept to a firm, a nonprofit organization, or a government agency you work for, or are familiar with, for the purchase of new laptop computers for their employees. Begin by briefly summarizing your selected organization. What is it? What does it do? List the different roles in a buying center and analyze who (from your selected firm, nonprofit organization, or a government agency) would occupy the different roles of the buying center. Justify the reason for selecting these job titles or departments for the various roles in the buying center. Which members of the buying center should the salesperson focus on when selling to your firm? Why? Explain how the buying process differs between organizations and consumers as it would be applied to the organization you have selected. Submission Details: Submit your analysis in a 4- to 5-page, excluding title and references Microsoft Word document, using APA style. Market Segmentation Different consumers have different product needs and use products differently. Segmentation seeks to group different demands and needs into clusters with similar demand patterns. The groups are called market segments and the process of dividing a market into segments is called market segmentation. Market Managers segment markets on the basis of four different dimensions: demographic, geographic, psychographic, and behavior. Marketing managers use multiple variables within each dimension as the actual basis for segmentation. One of the key applications of marketing research in marketing management is determining a combination of four dimensions that works best for the purposes of market segmentation. The selection of the target markets is based on different criteria. Organization's Objectives: What are the �nancial goals of the �rm and its market objectives? Is the �rm seeking to pursue a global or a domestic strategy? This is the starting point for the selection evaluation. Cost of Serving the Market Segments : Particular attention is paid to the economies of scale that might be accomplished by serving multiple market segments. Once the cost of serving market segments is identi�ed, the next step for marketing managers is to identify the organizational resources available for serving the different market segments. Organizational Resources : Organizational resources include not only �nancial resources but also product experience, market knowledge, and distribution channels. These resources are then matched to speci�c market segments to determine the best match. Market Size : The �nal step in the process is to determine the market size. This looks at not only the pro�t potential of the market segment but also its growth potential and the level of its competition. Segments having the potential to expand or deliver high-pro�t levels are the most desirable. Strategies for Selecting the Target Market There are three strategies for selecting a target market Undifferentiated Targeting Strategy - In this strategy, an organization selects customers within one segment that have the same wants and needs, for example, the business traveler. In the hospitality industry, a hotel organization might focus on the business traveler and business meetings and develop a conference hotel within a market that has a need for such services. A Concentrated Targeting Strategy - In this strategy, an organization selects one group within a market segment, for example, the basic business traveler at Microtel versus the upscale executive business traveler at the Ritz-Carlton. A Differentiated Multi-target Marketing - In this strategy, an organization offers several brands with varying services to a multitude of target markets. An example would be Marriott, which provides Fair�eld Inn for economy class, Courtyard for business clientele, Marriott Hotels for full service, and Residence Inn for extended-stay guests, all within the business segment. Additional Materials View a Pdf Transcript of  Market Segmentation (media/transcripts/Week_1/SUO_MKT3010%20W2%20L3.pdf? _&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393)  https://myclasses.southuniversity.edu/content/enforced/80393-17089375/media/transcripts/Week_1/SUO_MKT3010%20W2%20L3.pdf?_&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393 Buying Behavior Both qualitative and quantitative research may be applied to marketing. In place of focus groups and surveys, marketing managers use secondary information about an organization's strategies, �nances, and markets to understand its buying behavior. Marketing managers may then contact key purchasers or other personnel with a role in decision making to determine what their needs are. Often, this research is done informally by the organization's salespersons who service those accounts. The goal, as with marketing research, is to better understand the needs of the customers. There are �ve important stages of buyer behavior: 1. Information Search, 2. Purchase Decision, 3. Need or Want Recognition, 4. Evaluation of Alternatives, 5. Post purchase Evaluation. There are also four basic markets based on the buying mechanism and customer needs.  All four markets may be local or global, depending on the size of the �rm and its product mix.  The four basic markets are: 1. Government, 2. Business, 3. Consumer, 4. Nonpro�t. For the purpose of understanding buying behavior, the markets are further clustered into: Consumer markets: In the consumer markets, consumers use their own money to purchase goods they utilize for their own purposes. For consumers, the process is internal and is often applied unconsciously. Organization markets: Organization markets, by contrast, use money belonging to other people (stockholders, taxpayers, and donors) to buy products they need to produce the goods and services consistent with their organization's mission. The buyer decision process is common to both consumer and organization markets. For organizations, the buyer decision process is often spelled out in detail in policy manuals and procurement regulations. Factors Affecting Consumer Behavior Brand Advocates - These customers enhance your brand's market position by sponsoring and supporting the actions of the brand's organization. For example, some customers go out of their way to promote the services of an organization. The customers might communicate this through means such as electronic blogs or testimonials for the organization. Word of Mouth - This may be positive or negative depending on the customers' experiences. It is dif�cult for an organization to control this factor because the organization does not know where the customer stands (being neutral in his or her opinion). It could help or hurt an organization depending on what the customer says. Trial Purchase - This takes place when customers want to try products or services to see if they would like to purchase similar items or services in the future. Here, customers are looking to purchase products or services to meet only short-term needs. Purchasing Barriers - These may be created naturally or arti�cially to block present or future purchase of products or services by customers. An example of this is when customers cannot reserve a hotel's rooms because all rooms are already booked. Need Recognition - This leads a customer to purchase a brand only if it enhances his or her status. For example, customers may use high-end hospitality services such as luxury spas and resorts to enhance their status. Brand Protestors - These are deterrents to the actions of the brand itself. These are customers who had a bad experience with the brand or have adverse feelings toward the brand. These customers go out of their way to discourage others from using the brand. Additional Materials View a Pdf Transcript of Buying Behavior (media/transcripts/Week_1/SUO_MKT3010%20W2%20L1.pdf? _&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393)  https://myclasses.southuniversity.edu/content/enforced/80393-17089375/media/transcripts/Week_1/SUO_MKT3010%20W2%20L1.pdf?_&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393 Organizational VS Consumer Buying Marketing managers need to be aware of the various factors affecting consumer buying. Cultural Factors: Culture is a powerful in�uence based on where people were raised and their family heritage. It greatly in�uences their choices in food, clothing, and entertainment. Social In�uences: Social factors greatly in�uence a buyer's behavior as relationships in�uence individual's decisions related to purchases. Personal Experience: A close relationship exists between personal experience and buying behavior. For example, if people have a bad experience with a brand, they are unlikely to buy any product of that brand again. On the other hand, if they think that a brand will give them status, they may buy a product of that particular brand. Psychological Factors: Psychological factors are about what motivates a purchase. Therefore, these factors affect the buying decision. You may buy one brand of clothing for yourself but another brand when buying a gift. Therefore, marketing managers must consider the psychological factors when they are developing a marketing plan. Generally, business markets have few large buyers. Marketing targets professional buyers, and close relationships often develop between marketers and buyers. Three basic buying situations involving organizational buyers. Straight Rebuy: A �rm orders more products from the same supplier. It is the most common buying situation. Modi�ed Rebuy: A routine purchase order is modi�ed for some reason, such as a change in product features. New Task Buying: Identi�es an unmet need and goes through a process of vendor identi�cation, selection, and purchase. This is the most complex of the buying situations. There are four major in�uences on organizational buying: The economic environment of the market, which in�uences demand The organization and its culture The interpersonal relationship between the buyer and the seller Factors associated with the individual buying on behalf of the organization The organizational buying decision process has the same �ve steps as the consumer buying decision process. Need Recognition - The main difference between the two processes at the �rst stage of decision making is in the number of people who are involved in the recognition of the need (problem). The decision-making unit (DMU) in the organization is more complex and is usually in�uenced by many people across the organization. Information Search - An information search is more complicated for an organizational buyer than for a consumer. Depending on whether the organization is doing a straight rebuy or new task buying, the amount of time, effort, and money invested in the search for information is much higher. Another difference is that the demand for (or purchase of) products by organizations is more strongly in�uenced by environmental and economic conditions and changes in demographics. Evaluation of Alternatives - The main difference between consumers and organizations here is that an organizational buyer's evaluation criteria are more elaborate and stringent than a consumer's. There is an emphasis on obtaining good post purchase services. Another difference is that an organizational buyer is more concerned about the �nancial stability of its vendors than a consumer buyer. Purchase Decision -An established organizational buyer typically has contracts already worked out with vendors. Therefore, the purchase process for an organizational buyer tends to be less complicated than that for a new buyer. When the purchase is a straight rebuy, the organizational buyer would just place an open-ended purchase requisition, where the amount of product needed is called in by a procurement agent or automatically reordered when inventory levels are down to the acceptable minimum. When the purchase is a modi�ed rebuy, the organizational buyer needs to evaluate purchase options every year. Post-purchase Behavior –Post-purchase evaluations of a product are more formal for an organizational buyer than for a household consumer. A major component of a post-purchase evaluation is the service provided by the vendor. Additional Materials View a Pdf Transcript of Organizational VS Consumer Buying Behavior (media/transcripts/Week_1/SUO_MKT3010%20W2%20L2.pdf? _&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393)  https://myclasses.southuniversity.edu/content/enforced/80393-17089375/media/transcripts/Week_1/SUO_MKT3010%20W2%20L2.pdf?_&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393 Market Segmentation © 2016 South University Page 2 of 2 Marketing Management ©2016 South University 2 Market Segmentation Week 2 Lecture 3 Different consumers have different product needs and use products differently. Segmentation seeks to group different demands and needs into clusters with similar demand patterns. The groups are called market segments and the process of dividing a market into segments is called market segmentation. Market managers segment markets on the basis of four different dimensions: demographic, geographic, psychographic, and behavior. 1. Demographic The buyer’s age, gender, family, education, and socioeconomic conditions Demographic dimensions consist of the different variables and socioeconomic conditions used to describe markets. Variables commonly used include age, gender, income, family, marital status, and education. Demographics are the most commonly used segmenting dimension because of the ease with which this information can be collected. Demographic information is readily available in the United States through the U.S. Census Bureau. 2. Geographic The location and climate The geographic dimensions consist simply of the location. The region of the world, the climate, the state, or the country where consumers are located will influence their needs and desires. Geographic segmentation is often used in business-to-business marketing because of the large volume of goods needed by organizations. Industrial goods, in particular, because of their weight and size, are especially suited for geographic segmentation in relation to access to major transportation routes. Page 3 of 2 Marketing Management ©2016 South University 3 Market Segmentation Week 2 Lecture 3 3. Psychographic The buyer’s personality, beliefs, and standard of living Psychographic dimensions are based on an individual's personality, standard of living, and beliefs. This is a more difficult segmentation dimension to use because it requires a firm to do primary research on its consumers’ attitudes and personalities. This is expensive and time consuming, and these are the reasons organizations use psychographic variables as a supplement to geographic or demographic dimensions. 4. Behavior The buyer’s consumer attitude, behavior, and status Behavioral segmentation focuses on consumer attitudes and behaviors toward a firm's products. One behavioral segmentation variable is the buying situation. Individuals buying products for gifts approach the process differently than individuals buying products for themselves. Stores like Hallmark are geared toward market segments that buy products as gifts for others. The status of the buyer may also influence where and how the products are purchased. Behavioral segmentation is used often for products used as gifts or for building status. Marketing managers use multiple variables within each dimension as the actual basis for segmentation. One of the key applications of marketing research in marketing management is determining a combination of four dimensions that works best for the purposes of market segmentation. Once the marketing manager segments a market, the next step is to select the specific target market that will be the focus of the Page 4 of 2 Marketing Management ©2016 South University 4 Market Segmentation Week 2 Lecture 3 marketing plan.The selection of the target markets is based on different criteria. 1. Organization’s Objectives What are the financial goals of the firm and its market objectives? Is the firm seeking to pursue a global or a domestic strategy? This is the starting point for the selection evaluation. Once the organization’s objectives are applied, the next step is to determine the cost to service the different market segments. 2. Cost of Serving the Market Segments Particular attention is paid to the economies of scale that might be accomplished by serving multiple market segments. For example, a single production line could be used to produce products that may then be customized to meet the needs of different markets. Once the cost of serving market segments is identified, the next step for marketing managers is to identify the organizational resources available for serving the different market segments. 3. Organizational Resources Organizational resources include not only financial resources but also product experience, market knowledge, and distribution channels. These resources are then matched to specific market segments to determine the best match. 4. Determine the Market Size The final step in the process is to determine the market size. This looks at not only the profit potential of the market segment but also its growth potential and the level of its competition. Segments having the potential to expand or deliver high-profit levels are the most desirable Organizational vs Consumer Buying © 2016 South University Marketing managers need to be aware of the various factors affecting consumer buying. Understanding how these factors influence a target market is the key to developing a good marketing plan. Marketing research helps analyze these factors. That is why, marketing research is important to successful marketing. Consumer Buying 1. Cultural Factors - Culture is a powerful influence based on where people were raised and their family heritage. It greatly influences their choices in food, clothing, and entertainment. 2. Social Influences - Social factors greatly influence a buyer’s behavior as relationships influence individual’s decisions related to purchases. 3. Personal Experience - A close relationship exists between personal experience and buying behavior. For example, if people have a bad experience with a brand, they are unlikely to buy any product of that brand again. On the other hand, if they think that a brand will give them status, they may buy a product of that particular brand. Page 2 of 2 Marketing Management ©2016 South University 2 Organizational vs Consumer Buying Week 2 Lecture 2 4. Psychological Factors - Psychological factors are about what motivates a purchase. Therefore, these factors affect the buying decision. You may buy one brand of clothing for yourself but another brand when buying a gift. Therefore, marketing managers must consider the psychological factors when they are developing a marketing plan. Organizational Buying 1. Generally, business markets have few large buyers. Marketing targets professional buyers, and close relationships often develop between marketers and buyers. There are three basic buying situations involving organizational buyers. 2. Straight Rebuy It is a purchase situation in which a firm orders more products from the same supplier. It is the most common buying situation in marketing. 3. Modified Rebuy It is a purchase situation in which a routine purchase order is modified for some reason, such as a change in product features. 4. New Task Buying It is a situation in which a firm identifies an unmet need and goes through a process of vendor identification, selection, and purchase. This is the most complex of the buying situations. There are four major influences on organizational buying: Page 3 of 2 Marketing Management ©2016 South University 3 Organizational vs Consumer Buying Week 2 Lecture 2 1. The economic environment of the market, which influences demand - The demand for a product has a significant influence on the overall economic environment. If the demand for the organization's products and services is down, so will be the demand for purchasing products from vendors. The number of competing vendors will also determine the demand for a firm's goods and services. 2. The organization and its culture - The culture of an organization influences its buying or selling policies. The organization’s policies and procedures set the ground rules for how the firm will buy or sell. In addition to culture, the structure of an organization determines which individuals have the authority to make the buying or selling decisions, thereby influencing the buying or selling policies. 3. The interpersonal relationship between the buyer and the seller - The length of time the buyer and seller have been dealing with each other and their interests, as well as the persuasiveness of the seller, all influence the organizational buying process. 4. Factors associated with the individual buying the product for the organization - One major factor is the attitude of the organization buyer toward risk. Buyers who are risk averse must be approached with more caution because they will make decisions more slowly than those buyers who are less risk averse. Page 4 of 2 Marketing Management ©2016 South University 4 Organizational vs Consumer Buying Week 2 Lecture 2 Page 5 of 2 Marketing Management ©2016 South University 5 Organizational vs Consumer Buying Week 2 Lecture 2 Buying Behavior © 2016 South University Page 2 of 2 [Course Name (not number)] ©2016 South University 2 Buying Behavior Week 2 Lecture 1 The modern study of buyer behavior is very closely linked to the marketing concept. According to the marketing concept, an organization is most likely to build loyal customers if it focuses on satisfying the needs and wants of its target market. This is only possible when marketing managers have a solid understanding of the behavioral factors involved in generating customer satisfaction. The buyer behavior process explains how successful brands have been built in the past and how to build them in the future. This is the objective of having the marketing managers study buyer behavior and the measure of that study's successful application in the marketing plan. There are five important stages of buyer behavior. 1. Need or Want Recognition The first stage is need or want recognition. For a buyer, this may imply deciding that he or she needs a new shirt or is thirsty. Organizations often have a formal process for recognizing a need and making a request to begin the buying process. 2. Information Search The second stage is information search to satisfy the need. For a buyer, this might involve searching on the Internet for information about products, viewing advertisements, or traveling to retail outlets to check out the options available. For organizations, this means developing a list of vendors or posting a request for proposals to satisfy the need. 3. Evaluation of Alternatives The third stage is evaluation of alternatives. For a buyer, this means weighing the product choices using a mental checklist and deciding on the best. For Page 3 of 2 [Course Name (not number)] ©2016 South University 3 Buying Behavior Week 2 Lecture 1 organizations, this process is spelled out in their policy manuals and procurement regulations for selecting the best vendor and is often assigned to a department or an individual who specializes in procurement. 4. Purchase Decision The fourth stage is the purchase decision. For a buyer, this means making up his or her mind. For organizations, it is a formal process with approvals from their purchasing agents and perhaps superiors, depending on the size of the purchase. For major purchases, the board of directors often needs to approve the acquisitions. 5. Postpurchase Evaluation The last stage in buyer behavior is the postpurchase evaluation. For a buyer, this involves analyzing how he or she feels about the purchase and determining whether he or she is satisfied enough to repeat it. For organizations, it’s a formal review process to see if the purchase satisfied their needs There are four basic markets based on the buying mechanism and customer needs. All four markets may be local or global, depending on the size of the firm and its product mix. 1. Business Markets Consist of organizations that buy goods and services to produce services for consumers Business markets consist of organizations that buy goods and services to sell or perform services for their consumers. These organizations buy products to generate revenue. 2. Government Markets Consist of local, state, national, and international agencies Government markets consist of local, Page 4 of 2 [Course Name (not number)] ©2016 South University 4 Buying Behavior Week 2 Lecture 1 state, national, and international agencies. These markets need to buy products to serve their citizens through different kinds of services. Because they spend taxpayers’ money, these markets have special procurement regulations. 3. Nonprofit Markets Consist of organizations that buy goods and services to sell or perform services for consumers but that are not in the business to make a profit Nonprofit markets comprise a fourth type of market. Like business markets, nonprofits also buy goods and services for producing services for consumers, but they are not in business to make a profit. As a result, they must work within a very limited budget, making pricing important. 4. Consumer Markets Consist of individual consumers of goods and services Consumer markets consist of the individual consumers of goods and services. These are the traditional markets most individuals are familiar with through their own participation. For the purpose of understanding buying behavior, the markets are further clustered into: • Consumer markets: In the consumer markets, consumers use their own money to purchase goods they utilize for their own purposes. For consumers, the process is internal and is often applied unconsciously. • Organization markets: Organization markets, by contrast, use money belonging to other people (stockholders, taxpayers, and donors) to buy products they need to produce the goods and services consistent with their organization's Page 5 of 2 [Course Name (not number)] ©2016 South University 5 Buying Behavior Week 2 Lecture 1 mission. The buyer decision process is common to both consumer and organization markets. For organizations, the buyer decision process is often spelled out in detail in policy manuals and procurement regulations.