LE SSON 4

The Consumer ond Business Marhets

Marheting is an exploration of a new feat.

Know the markets and explore each territory.
And one willfind a greater aduantage.

77
78 . EDWARD D, GONZALES

Let's Test the Morket

NAME: DATE:
YEAR & SECTION: SCORE:

Multiple Choice: Encircle the letter af the correct ansuer

1. It pertains to the buying behavior of individuals and households or called end consum-
ers that purchase goods or render services for personal utilization.
a. behavioral marketing c. behavior marketing strategy
b. consumer buyer behavior d. consumer marketing

2. The set of values, perceptions, wants, and behaviors learned from the family and other
important institutions.
a. subculture c. culture
b. artitude d. perception

3' A group of people with shared value systems based on common life experience and
sifuations.
a. subculture c. culture
b. social class d. family group

4. Relatively permanent and ordered divisions in a society whose members share similar
values, interest and behavior.
a-. social class c. family group
b. attirude d. dominant society

5' A buying situation where business buyers are regularly reordering goods or services
without any alterations.
a. buying
regular c. straight rebuy
b. new task d. modified rebuv

6. A buying situation where the business buyer sees the need to alter the product require-
ments, price rates, conditions, and suppliers.
a. newtask c. system rebuys
b. modified rebuy d. regular buying
 PRINCIPLES OF MARKETING . 79

7. A buying situation where the business buyer procures a product or seryices for the
first time.
a. business rebuy c. regular buying
b. newtask d, system rebuy

8. It refers to the individuals in the buying center of the company who has an impact on
buying decision.
a. user c. influencers
b. decision maker d. buyers

9. The individuals in the buylng center of the companywho manage the flow of infor-
mation or communication to others.
a. gatekeeper c. user
b. influencer d. decision maker

10. It refers to individuals or divisions that participate in the buying decision-making pro- L'|
cess.
a. buyrng center c. gatekeeper
b. user d. influencer
li I

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 80. EDWARD D. GONZALES

The Big ldeo

The customer is the most important element in the marketing environments. \Thether
from the consumer or business side, the behavior of the customers should be studied by
the marketers in order for them to craft a marketing strategy and tactics that work.

In this chapter, both consumer and business markets will be discussed. Consumer behavior
will be defined and its elements will be elaborated. And lastly, the buying decision process
will be described.

The Game PIan

At the end of the lesson, the learners should be able to:
L. Describe the consumer and business markets
2. Differentiate the buying behavior and decision making of individual/household
customer Yersus the business (organizational) customer
3. Identify and segment market for product or service
4. Select the appropriate target market segment and its positioning

Qet Down to Business

Anolgzing Consumer ond Consumer Behouior
Studying consumer market is like probing on the complicated factors that affect the cus-
I tomer's preferences and decisions in purchasing a product. The comprehending buying
? U"havior of the customers in the market is very important to any marketer. It is an essential
ingredient in a successful marketing campaign. The approach, strategy, and tactics in mar-
keting is heavily relying on consumers buyer behavior.

Consumer buyer behauiar pertains to the buying behauior of indiuiduals and households or called
end consumers that purchase goods or render servicesfor personal utilizahon.

To better understand the concept of consumer buyer behavior, Kolter and Armstrong pro-
vided a model that explicates the behavior of customers.
 PRINCIPLES OF MARKETING o 8T

'l Culture
d
d Reference
Fr grouPs " &e d lde lulc
r.l Subculture
o
Ei" oc"upatim
6
o ilotiyation
$ I
o Perception
Fanily
Social class I fcma*" Sttlrtio o
Leatning
& HssryL
n Beliefe &
PseEUry & Self-
Ro 1 es &s tatu s etti-tude3

Figure 4.1. Factors InfluencingConsumer Behauior, Kotler and Armstrong

The model shows that customer's behavior is influenced by cultural, social, personal, and
psychological factors. It has been said that marketers have a little controi of these factors
ergo, it needs to be observed carefully and considered greatly in crafting the marketing
plan.

Culturol Factors
Deeply rooted, cultural factors have a great impact on consumer behavior. As part of the
strategy, the marketers must examine thoroughly how culture, subculture, and social class
affect the behavior of consumers.

Culture refers to the set of ualues, perceptions, wents, and behauiors learned
from the fam-
ily and other important institutions (Kotler and Armstrong). Most of wants and be-
havior of customers can be associated with the rFpe of culture that. they acquired
from their family, peers, and other significant institutions. For example, a person
growing in a conservative society, where close family ties and strong family values
like dining together and respect for the elderly are strictly observed, is likely pre-
ferred products or services that promote family values. Hence, a lot of TV com-
mercials for products or services using scenes that depict positive values for family.

Subculture refers to a grlup of people with shared ualue systems based on common life
experience and situatians (Kotler and Armstrong). Religious, racial groups, and ge-
ographic regions are considered variables ofsubculture. There are products or ser-
vices that base their approach to target customers using subculture. For example,
some high-rise condominiums feature not only the comfort and convenience of
owning the units to their customers but also they add the lucky structure feature
of the building based on the traditional chinese belief of feng shui as a selling
point.
 8z o EDWARD D. GONZALES

Social class refers to relatiuely perrnanent and ordered diuisions in a society whose mem-
bers share similar (Kotler and Armstrong). Income is
ualues, interest, and behauior
just one of the factors that have to be considered in determining the social class of
the consumers. Other factors such education, wealth, and occupation should also
be considered. One has to understand that individuals belonging to same social
class exhibit similar buyng behavior.

Social Factors
Social factors such as reference group, family, social roles and status have implication in
the behavior of customers towards buying products or services.

Reference Group. Many marketers refer to the reference group of the target
custorners in preparing their marketing campaign. This is because of the idea that
customer's attitude and behavior are formed based on comparative views that they
make in consonant to their reference group. Marketers realize that reference
group to which customers do not belong affects their preferences. For example,
manyteenagers look up to music bands, glee clubs, dance troupes, basketball teams
or cheering squads and hoping to be part of the group. Knowing this will provide
the marketers better chance to establish a relationship with teenage customers by
using the reference group in their marketing campaign. A KPop Group endorsing
i

I garments or famous basketball team promoting energy drink is iust some of the
marketing strategies that companies are using in capturing the customers atten-
tion.

Farni\ Group. Marketers pay serious attention to the family because it is said to be
the most significant consumer-buying group in the market. Many researchers in
marketing have explored the influential power of farnily members on buyer be-
havior. Each member of the family assumes different roles in buyrng decision. For
example, in buying a soy sauce for the use of the family, marketers should deter-
mine who is the initiator or the one who first thought of buying the product. In
most cases, it is the mother's role. Next, the marketer should identify the influ-
encer or member of the family that opinion matters in decision making. In this
sense, it can be the children or extended family members like grant parents. After
determining influencer, the marketers must identifu the decider or the one who
decides whether to buy the brand or not. It can be the parents who decide what to
buy. The purchaser or buyer is another significant player in the process. The pur-
chaser can be anyone in the family. It can be one of the children, housemaid, or
the mother herself who will go to the retaii store or grocery and buy the soy sauce.
 PRINCIPLES OF MARKETiNG r 8g

Moreover, Iasdy, the marketer should identifu the user or the person who con-
sumes the product. In this point, the users of the soy sauce are the entire members
of the family.

Initiator

InfLuencer

Fanily

Purchaser Decider I

li

Figure 42. RoIe of Famill

Social Roles and Status. The roles and status of an individual may vary depending
on the nature of groups that he or she belongs. Customers may have a variety of
groups, like family, teams, organizations, or even social media communities.

Customers rypically select goods or service based on their roles and status. For example, a
father may have diversified roles. He portrays the character of a husband and father to his
family, a business person and boss to all the staff in his company, a team player in his bas-
ketball team, and executive committee in his organization. Therefore as husband and fa-
ther of his family, he will choose to buy a vehicle that reveals his role and status in his
family.
 84 r EDWARD D. GONZALES

Personal Factors
Customer's age and life cycle, occupation, economic situation, lifestyle, and personalify and
self-concept are the personal factors that have a strong influence on their decision-making.
A marketer should have a closer look at these factors.

Age md Lifecycte Stoga. Seasoned marketers realized that customers change prefer-
ences on goods and services as they age. There are certain commodities that the
clients prioritized in their grocery list when they were younger, which today are
no longer significant to them. This is because customey's tastes in most Products
such as food, clothes, appliance and even their concept of entertainment are
changing as they mature over the years.

Family life-cycle stage is also affecting the buying behavior of customers' 'Jfhen
I the tife-stage of the customer changes, which most of the time attributed to
demographics and life's events such as marriage, raising children, providing
i
I education to children, changes in income, independence, and retirement, the
marketers must develop products and marketing plans that would satisfy the
I
customers as they move from one stage to another stage. In this way, the relation-
ship between the companies to the customers will not be interrupted as the family
I

it
matures.

'il
Occupanon.The nature of work of the customers is a vital variable that marketers
lr
I
must consider in examining the bulnng behavior. Blue-collar workers and white-
ll collar workers have a different preference in buying goods or services. Regarding
'l buyrng clothes, most workers with manual jobs prefer rugged work clothes while
the executives select business attires in the purchase of a wardrobe' Marketers can
develop products that would cater specific occupational group'

Economic Situation The economic position of customers has an impact in their se-
lection of products, serviceg and stores. For customers who have a low-income
rate, they often choose affordable products that they buy in retail stores, whereas
customers vrho have high-income rate purchase commodities in volumes in de-
partment stores and groceries.

Marketers must see this factor significant to their marketing strategy. In times of
recessions, companies consider redesigning the products and their Prices to coPe
with the situation of the customers. Most companies offer discounted prices and
buy one, take one promotion to maintain the proper relationship with their
customers.
 PRINCIPLES OF MARKETING o 8S

Lfestyle. The lifestyle of customers may be determined according to their activi-

ties, interests, and opinions (nIO). Customers may have distinct lifesryle even if
they belong to the same subculture, social class, and occupation. The lifestyle of
the customers tells many things about how they act and interact in the society.

The lifestyle factors:

Achuities - work, hobbies, recreation, social happenings
Interest - food, fashion, music, arts
Opinions - self, societal, business, commercial issues

By considering these factors, marketers will have a full understanding of the

changing consumer values and how these affect their behavior in purchasing the
product. For example, customers patronize products not only for its features but
also for the values and lifesfyle that products promote. Some teenage customers
base their choice of garments on their distinct lifestyles. That is why in the cloth-
ing industry, many clothing lines offer different images that depict the specific
lifestyle of customers. There are chic, sporty, punkie, and masculine designs and
styles that teenage market can choose.

Personalitl and Self-Concept.The unique personality of the customers has an impact

on how they see the value of the products and services. Personality typically refers
to the traits of a person regarding moral, superiority, openness, flexibility, aggres-
siveness, and protectiveness. These factors comprise the constructed self-concept
of the customers.

Marketers find personality factors functional in examining consumer buying be-

havior. Thus, marketers put personaliry on the brands so that customer can easily
relate to the products or services. Matching the personality of the customers to
the brand personality is a usual marketing strategy, which companies are using to
establish relationships.

P sy cholo gical F actor s:

Motivation, perception, learning, and belief are psychological factors that gready affect the
purchasing selection of the customers.

Motiuation. Most marketers focus their considerabie attention on finding out what
motivate customers in buying products and services. The motive or the drive off
clients in acquiring products goes with their identified needs. It can be biological
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86e EDWARD D. GONZALES

by nature such as hunger and thirst, or it can be psychological by nature such as

love, affection, and esteem. vhatever the need may be, it will only be a motive or
drive if the needs will become adequately urgent or important to lead the customer
to find satisfaction.

E6tee! l{eeds (self-

eEteet!, recognitioa,
status )

Social Neede (eense of belongirrgness,

love)

Safety Needs {securlty, protection)

Phyeiological Xeede (Eunger, Thirst)

Figure 43. Maslow's Hierarchy of Needs

Abraham Maslow's identifies five basic needs of man, the physiological needs, safety needs,
social needs, esteem needs, and self-actualization needs. He presented these needs in a hi-
erarchical order to show that human needs should be satisfied in a certain way. At the
bottom of this hierarchy is most urgent and important, and at the top is the least urgent
and important.

lt's been said that customers will satisfr first their most essential needs before proceeding
to the next needs that have to be satisfied. This is quite evident in most families. The head
of the family will secure first the basic needs of the famiiy members like food, shelter, and
clothing before considering the other needs of his family. For example, a typical familv will
pick can goods and rice (biological needs) in a grocery before they consider insect repellants
(security needs) in purchasing commodities.
 PRINCIPLES OF MARKETING o 8z

Perception.The customer's perception directs their buying behavior. Perception is the process
by which people select, orgonizer and interpret informotion to form a meeningfiil picture (Kotler
and Armstrong). Using the five human senses, sight, hearing, smell, touch and taste, cus-
tomers from their perception towards the products or services. Marketers should take note
that customers may behave even though they have the same motivation under the same
situation differently. This is because customers may perceive situations differently depend-
ing on the perceptuai process they use.

The three (3) perceptual processes (Kotler and Armstrong):

1. Selectiue attention - the tendenT for pegple to screen out most of the information
to which they are exposed. O t'
'' "'-,''"' i
L
2. Selectiue distarttan- the tendenry of people to interpret information in a way that
will support what they already believe. (
''
'- '",t )
3. -
Selectiue retention customers are likely to remember good points made about com-
peting brrndr. (

Understanding these three (3) processes, marketers should carefully craft the marketing
plan of their brands to get the message, however.

Learning. Customers learn through their experiences from using products or services.
Through the interaction of drives, stimuli, cues, responses, and reinforcement, the cus-
tomers achieve learning. For example, a father is motivated to buy a padlock for the secu-
rity of his family. The family's security is called drive or the internal stimulus that leads the
father purchase a padlock. The father's response to the thought of buying the padlock may
be affected by the available cues like special price offers, discussions with fiiends, and
a partic-
unique features like a padlock with Bluetooth. Once the father has decided to buy
ular brand of the padlock, his response to the product will be reinforced based on how
rewarding his experience in using the padlock. If his experience with the brand is satisfy-
ing, it is expected that the father will buy the same brand of the padlock when his need
arises.

Belief and Attitude.It has been said that belief and attitude are formed through doing and
i
learning. Kotler and Armstrong defined belief and attitude as:

\
Belief k a clear thought that a person holds abaut something.
Amtude is a person's consistently fauorable or unfauorable eualuations, feelings and
tendencies toward an object or idea.
 88 . EDWARD D. GONZALES

Marketers are interested to know the belief and attitude of the customers because it affects
consumer's buyng decisions.

Here are things that marketers should understand on belief and attitude:
r Customels belief maybe taken from their real knowledge, opinion, or faith
. Belief may or may not have emotions charge
r Customers may develop their image of the brands based on their existing beliefs
r Customers may make actions based on their beliefs.
. Attitudes lead customers to like or dislike the brands.
r Altering customer's attitudes are difficult.
I Marketers should suit its brands to the prevailing attitudes ofthe customers rather
than to try altering them.

i' r

Fresh Perspectiue: Tgpes of Buging Behouior

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Ir,

hr

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PRINCIPLES OF MARKETING . g9

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 90 ' EDWARD D. GONZALES

ldentifging the Buger Decision process

Every marketer must fully comprehend how a customer arrives at a certain buying deci-
sion. This knowledge will help the marketing team to strategize better their approaches in
building lasting relationship with the customers.

The actual buying of products and services is just a little part of the entire consumer's buy-
ing process. It starts with the need recognition and ends with post purchase behavior. Ko-
der and Armstrong explain this process using five (5) key variables.

Need Inforaation uation of Purchase Postpurchase

recognition gearch alternatives deci.sioa behavlor

I Fipure 4.4. Buyer Decision

rn'i.1.alf n+{n .,{ rl,,.r
r Neeilrecognitimt The buying process begins with need recognition. In this stage, the cus-

|1 , tomers realize a need. The need may come from different types stimuli such as internal

|| ,t
stimuli like hunger or thirst, and external stimuli like advertisements or a sirnple chat with
I iiiends. For instance, a 30-second television commercial of a fast food chain on their 100%
beef quarter pounder burger steak with cheese melt might create a need for consumers to
I
'\ try the brand and satis$r their cravings.

IlI In this stage, it is important to conduct a consumer research to find out the kinds of needs
that arose from the customers, to discover the sources that led customers to those kinds of
needs, and to identifr reasons that led customers to a particular product.

tnfotmaionSearch.In this stage, the customers are urged to seek for more information on
the product they want to buy. customers may refer to several of sources like:
1. Personal sources -
Family, relatives, friends, classmates, colleagues
2. Commercial sources - advertising, sales personnel, websites, brochures, leaflets
3. Public sources - media, consumer organization, internet domains
4. Experiennal sources - actual examination and utilization of the product

The more information is acquired from the sources, the better for the consumers to eval-
uate and drop certain brands, as their awareness and knowledge ofbrands increases.
 PRTNCTPLTS OF MARKETTNG . 9I

Therefore, the marketers should identi$' proper promotional tools to reach customers
with right information on their brands.

Eualwation of alternatiues. In this stage, customers utilize information to assess and evaluate

alternative products or services in their set of choice. Marketers must understand how
customers weigh their alternatives.

Some customers are critical thinkers when it comes to their choices. Consumers may fol-
low logical thinking process and mindfully calculate the alternative routes in buying deci-
sions.

On the contrary to critical thinkers, there are some consumers who rely on their impulse
and intuition in buying brands.
1l

There are some customers who decide on their own. Moreover, there are customers who
are greatly depending on the opinions and views of their family and friends. li

Purchose Decision. This stage implies that customers make a decision oq which brand to I

purchase after the extended evaluation and assessment. It can be said that buying decision
of the customers will lead them to buy their most preferred brand, however, intervening l

variables such as the attitude of others and unexpected situational factors may come into l1
play and affect the purchase intention and purchase decision of the customers.
I

The first variable, the attitude of others may expiain the influential power of close people
such as family and friends to the customer's buying decision. If a very close friend of the lr
customer will tell him to buy a certain brand because of its affordability, there is a great
likelihood that the customey's decision will be influenced even if he or she like the expen-
sive brand.

The second variable, the unexpected situational factors may show how situations affect the
choices of customers. For example, a customer plans to buy a desk light for his or her study
table. The customer is setded to buy a desk light that is portable and has dual voltage so
that it can be used everywhere he or she goes. However, the customer's decision in buying
the favored desk light changes when an advisory came in telling that series of power inter-
ruptions will occur for the next six months due to climate change. Thus, the customer buys
a portable, rechargeable desk light to cope with the situation.
 92 . EDWARD D. GONZALES

Postpurchase Behauior.In this state, customers may make reactions to signifu their satisfac-
tion or dissatisfaction on a specific purchase. The satisfaction and dissatisfaction of the
customers are directly related to their expectations and their perceived performance of the
product. For instance, if the product fails to meet the expectations, the customer will be
upset. If the product fulfiils the expectations, the customer will be pleased. If the product
goes over to the set expectations, the customers will be overjoyed.

Marketers should commit only what their products or services can offer so the customers
will not expect so much and thus, be satisfied.

Understonding Business Morhets qnd Business Buger Behouior

As described by many, business market is enormous regarding financial and process in-
volvement compared to the consumer market. For example, pharmaceutical companies
may undergo significant business transactions in manufacturing and sell a medicine. The
I
participation of different suppliers of chemicals used in producing medicine, oii to run the
rl
machine, and raw materials to create packaging are clearly evident in the production asPect
I of the business. Then disposing of produced medicine comes in. The companies will sell
the produced medicine to the local drugs stores, which they will eventually sell it to the
end consumers. This shows that several series of business purchases were executed for only
,l

a series of consumer purchases.

t
1I

The business market may have similarities with consumer market in one way or another.
However, business market has distinct characteristics, which separate it from the consumer
market. The differences are the following:
1. Regarding market structure
o The business markets consist of the small number but greater buyers.
r The basis of business buyer demands is coming from end consumer demands
2. Regarding nature of the buying unit
. There are manybuyers involved in business purchase
e There is a more technically experc purchasing effort involved in business buy-
ing
 PRINCIPLES OF MARKETING . 93

3. Regarding the types ofdecisions and decision process

o There are many complex buying decisions, which business buyers usually con-
fiont
r The business buyrng process is more formalized
r The buyers and the seller relate more closely to each other thus, build tight
and lasting relationships

Marketers must regard the study of business buyrng behavior. It will provide the compa-
nies with a more advantageous position in the market.

Business buying behauior refers to the buying behauior of the companies that bult commodities,
which are utilized for the manufactunng of goods or seruices intended for the consumption of the
end consumers.
:

The basic thing that marketers should consider in examining the buying behavior of busi-
ness is how business buyers respond to different marketing stimuli such as product, price, I

place, and promotion, and other stimuli such as economic, technological, political, cultural,
and competition.

Part of studying business buyrng behavior is to know the different buying situations that
business buyers might encounter. Here are the following principal types of buying situa- t
tions:

straight rebuy.rn this kind of buying situation, the business buyer regularly reor-
ders goods or services without any alterations. This is typicaiiy rnanaged by the I

pfocurement service in a regular manner.

The existing suppliers in this type of buying situation should maintain the delivery
of product and service excellence. For another supplier who wants to penetrate
and intercept the business to the existing providers of the buying company must
try to improve the value and exploit the discontentment. In this way, the buyer
will consider them.

Modified rebuy.lnthis type of buying situation, the business buyer sees the need to
alter the product requirements, price rates, conditions, and suppliers. Considering
this situation, t}re existing suppliers ofthe buying company may feei threaten and
forced to deliver its best effort to secure the accounrs.
94 o EDWARD D. GONZALES

New task.In this type of buying situation, the business buyer procures a product or
services for the first time. In this case, marketers must try to collect more infor-
mation to lessen the cost or risk, and questionable decisions.

Most buying companies are settled to purchase a total solution to a problem single
seller or sole provider. This is called system selling or mlution selling. This will
avoid buyers the hassle of undergoing separate decisions on complex buying situ-
ations.

Another concept that marketers must try to comprehend in studying the business market
is the different participants and their relationships in the business buying process.

Gatekeeper Influencer

Deciders Buyers

Figure 45. Business Buying Process Participants

a. users refer to the members of the buyng company who will utilize the purchased
commodities
b. Influencers refer to the individuals in the buying center of the company who has an
impact on buying decision. These individuals often set requirements and provide
data for assessing and evaluating alternatives.
c. Buyers refer to the individuals in the buying center of the company who are re-
sponsible for the actual buying ofthe products or services.
 PRINCIPLES OF MARKETING r 9s

d. Deciders referto rhe individuals in the buying center of the company who have
formal and informal power to choose and approve the final supplier
e. Gatekeepersrefer to the individuals in the buying center of the companywho man-
age theflow of information or communication to others.
f. Buling center refers to individuals or divisions that participate in the buying
decision-making process.

Major influences on business bulters. In arriving at wise bqang decisions, business buyers
need to consider influential factors such as environmental factors, organizational factors,
interpersonal facto rs, and individual factors.
Enuironmentalfactors - comprise of economy, supply conditions, technology, pol-
itics/regulation, competition, culture and customs

Organizationalfactors - comprise of objectives, strategies, structure, systems, and

procedures

Interpersonal factors - comprise of influence, expertise, authority, and dlmamics

Indiuidual- comprises of age, education, job position, motives, personality, pref-

erences, and buying style.

! ecoroy, supply
f; conditlons,
I techmlogi', ! objectives,
f; politics/regulation ! rtrategies, E irfluelce,
.l conpetitior, ! strsctu!€, Io erpert*e,
-. ;l job
age, educatioo,
!
H
culture rd $ rystes, ald H autborltY ald
o. { position,
cugtos !6 pr0ceoures a dY0atrlcs ! mtivee,
o0
! po S persoaality,
o H
,! preferences, and

Figure 46, Majar InJTuencers on Business Buyers

96 r EDWARD D. GONZALES

Determinlng the Business Buging Process

In the buying process of business, there are eight (S) significant stages that marketers musr
take into account. These are the problem recognition, general need description, product
specilication, supplier search, proposal solicitation, order-routine specification, and per-
formance review.

It will experience all these stages. On the other hand,

has been said that new task buyers
buyers who perform modified or straight rebuying will not go through some ofthese steps.

Problem Recognihon- This is the first stage in the business buying process. In this stage,
someone in the company will identifii and realize a problem or need that has to be
addressed through the acquisition of goods or services. Sources of problems or needs can
be internal stimuli like there is a need to improve the qualiry of the existing product. Thus,
there is a need to purchase new materials, or can be external stimuli like a market
challenger is claiming that they have the latest technology in producing qualiry product
hence, the company who is being challenged must enhance and buy new equipment to
cope with the situation

Generol Need Description.In this stage, the buyers must identifii and give details such as the
characteristics and quantity of the items. The buyers may find this stage easy if they are just
looking for standard items. However, if the buyers identify more complex items to buy,
they need to seek for technical assistance from the experts such as engineers, chemists, and
consultants in defining the items.

Praduct Spectfications. This is the stage where the buying companies take a decision and

specify the suited technical specifics of the needed items. Most buyers use product value
analysis, which provides great help in reducing the cost by carefully examining the com-
ponents and exploring less costly and yet effective alternatives. The help of the experts is
highly needed in determining the best product characteristics of the items needed by the
buying company.

Supplier Search. In this stage, the buyers start to search for the best sellers that can supply
the needed items. The buyers must be resourceful and patient in their search. Buyers may
look into trade directories, refer to Internet search engines, and/or make calls to other
companies for referrals.
 PRINCIPLES OF MARKETING . 97

Proposal SolicitahoruAfter searching for possible suppliers, the buying companies will invite
the qualified sellers to submit proposals and/or quotations. The sellers may submit written
proposals, quotations, catalogs, or sometimes if there is a need, they wilt send sales repre-
sentatiYes to conduct formal presentations and demonstrations. The seller's presentation
will help the buyers to evaluate the suppliers better.

Supplier Setection.In this stage, the buyers review and assess the proposals and choose a
supplier or suppliers. It is important that the buyers must come up with criteria for select-
ing a supplier. The supplier must comply the criteria given by the buying companies.

Most buyers take into consideratioas the following aspects in searching for suppliers:
o Quality of products and service being rendered
o Reputation of the suppliers in the industry
r Sense of time (meeting the deadlines)
o Moral and ethical behavior of the supplier's company
r Sinceritl and openness of communication channels
o Proximity of the supplier's location
o Competitive prices

Some buying companies conduct plant or office inspections to see if the suppliers are ca-
pable of delivering excellent quality products or services needed. Negations between the I

buyers and the sellers oftentimes happen in this stage. Buyers may negotiate prices and
terms with the sellers before making a decision.

Order-Routine Specification-This is the stage where the buyers write the final order with the

selected seller. The buyer may include in their list the following:
r TechnicalSpecifications
r Qualtty standards
r Schedule or Time of delivery
o Policies for returning goods
o Product warranties

For maintenance, repair, and other items related to operations buyers should use blanket
contract. In this way, buyers are more secured regarding resupplying the needed products
or services at the agreed prices at the given time frame.
 98 o EDWARD D. GONZALES

Performance Reuiew.This stage is cruciai in the business. This is where the buyers assess the
performance of the selected sellers. The result of the assessment w'ill determine whether
the buying company will continue, alter, or terminate the business transaction with the
suppliers.

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Figure 4.7. The Business Buying Process, Kotler, and Armstrong

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 PRINCIPLES OF MARKETING . 99

The Sgnergg
1. Form a group of 5 and read the case study below.
Cultural factors have a great impact on consumer's behavior. Pretending that your
group is a market challenger in the shampoo industry. You are about to launch a sham-
poo intended for teenagers. How will you influence your target market to buy and try
your product?

Case guide:
a. Think of a brand name ofyour shampoo
b. Formulate your objectives
c. \fhat are the benefits ofyour shampoo?
d. \Who is your target consumer for your shampoo?

CULTURAL SOCIAL PERSONAL PSYCHO BUYER

LOGICAL

2. Form group of 5 and discuss the rypes ofbuying behavior. Think of a situation where
a

the group can display the different buyrng behavior. Present to the class the different
situations.
BUYTNG BEHAVIOR SITUATIONS
Complex Buying Behavior

Dissonance-Reducing Buyrng Behavior

Habitual Buyrng Behavior

Variety-Seeking Buying Behavior

 1OO . EDWARD D. GONZALES

Raise The Bor

NAME: DATE:
YEAR & SECTION: SCORE:

I. Identiftcation: Vrite the correct answer.

1. In this rype ofbuying situation, the business buyer regularly reor-

ders goods or services without any alterations
2. It refers to the members of the buying company who will utilize the
purchased commodities
3. This rype of behavior occurs when customers are highly involved
in buying and perceiving remarkable variations among the brands.
4. It refers to the individuals in the buying center of the company who
llt are responsible for the actual buying ofthe products or services.

trt characteristics and quandry of the items

I 6. It refers to the individuals in the buying center of the companywho
lr has an impact on buying decision.
-5.Inthisstage,thebuyersmuStidentifyandgivedetailssuchasthe
7. This rype of behavior takes place when customers greatly immersed
t, in expensive, rare, or high-risk buying, however, sees small varia-
ll I tions among brands.
8. It refers to individuals or divisions that participate in the buying
t,
decision-making process.

lit 9. In this stage, the buyers start to search for the best sellers that can
I

supply the needed items. The buyers must be resourcefirl and pa-
tient in their search.
10. This type of behavior happens when customers find less involve-
ment in purchasing and small, remarkable variations in brands.

il, Enumeratton: r$/rite the conect answer.

1-4. Four (4) Tlpes of Buying Behavior
1.

2.

3,

4.

it
 pRINCIPLES OF MARKETIITJG I 1o1

5-10. Six (6) Business Buying Process Participants'

5.

6.

7.

8.

9.

10

Qo Extro MiLe
1. Explain the Maslov/s Hierarchy of Needs and it important in determining consumer
motivation. Choose a particular product as an example.

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Maslou's Hierarchl of Needs
7-=

1O2 . EDWARD D. GONZALES

2. Research and Explain the Busiless Buying process by giving a real example.

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Busine s s Buying Proce ss
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7-=

1O2 . EDWARD D. GONZALES

z. Research and Explain the Business Buying process by giving a real exampie.

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Busines s Buying Proce ss
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