REVIEWING AND EXTENDING THE CONCEPTS
Objectives Review
This chapter is the last of three chapters that address understanding the marketplace and consumers. Here, we’ve looked closely at consumer and business buyer behavior. The American consumer market consists of more than 331 million people who consume more than $13 trillion worth of goods and services each year, making it one of the most attractive consumer markets in the world. The business market in- volves even more dollars and items than the consumer market.
Understanding buyer behavior is one of the biggest challenges marketers face.
OBJECTIVE 5- 1 Understand the consumer market and
the major factors that influence consumer buyer behavior.
The consumer market consists of all the individuals and house- holds that buy or acquire goods and services for personal con- sumption. A simple model of consumer behavior suggests that marketing stimuli and other major forces enter the consumer’s
“black box.” This black box has two parts: buyer characteristics
and the buyer’s decision process. Once in the black box, the inputs result in buyer responses, such as buying attitudes and preferences and purchase behavior.
Consumer buyer behavior is influenced by four key sets of buyer characteristics: cultural, social, personal, and psycholog- ical. Understanding these factors can help marketers to identify interested buyers and to shape products and appeals to serve consumer needs better. Culture is the most basic determinant of a person’s wants and behavior. People in different cultural, subcultural, and social class groups have different product and brand preferences. Social factors —such as small group, social network, and family influences—strongly affect product and brand choices, as do personal characteristics, such as age, life stage, occupation, economic circumstances, lifestyle, and per- sonality. Finally, consumer buying behavior is influenced by four major sets of psychological factors —motivation, percep- tion, learning, and beliefs and attitudes. Each of these factors provides a different perspective for understanding the work- ings of the buyer’s black box.
Key Terms
OBJECTIVE 5-1
Consumer buyer behavior Consumer market Culture
Subculture Social class Reference group Opinion leader
Word-of-mouth influence Influencer marketing Online social networks
Lifestyle Personality Motive (drive) Perception Learning Belief Attitude OBJECTIVE 5-2 Need recognition Information search
Alternative evaluation Purchase decision Postpurchase behavior Cognitive dissonance Customer journey OBJECTIVE 5-3 New product Adoption process OBJECTIVE 5-4
Business buyer behavior OBJECTIVE 5-2 Identify and discuss the stages in the
buyer decision process.
When making a purchase, the buyer goes through a decision pro- cess consisting of need recognition, information search, evalua- tion of alternatives, purchase decision, and postpurchase behavior.
During need recognition, the consumer recognizes a problem or need that could be satisfied by a product or service. Once the need is recognized, the consumer moves into the information search stage. With information in hand, the consumer proceeds to alter- native evaluation and assesses brands in the choice set. From there, the consumer makes a purchase decision and actually buys the product. In the final stage of the buyer decision process, postpur- chase behavior, the consumer takes action based on satisfaction or dissatisfaction. The marketer’s job is to understand the buyer’s behavior at each stage and the influences that are operating.
OBJECTIVE 5-3 Describe the adoption and diffusion process for new products.
The product adoption process is made up of five stages: aware- ness, interest, evaluation, trial, and adoption. New product mar- keters must think about how to help consumers move through these stages. Regarding the diffusion process for new products, consumers respond at different rates, depending on consumer and product characteristics. Consumers may be innovators, early adopters, early mainstream, late mainstream, or lagging adopt- ers. Each group may require different marketing approaches.
Marketers often try to bring their new products to the attention of potential early adopters, especially those who are opinion leaders.
OBJECTIVE 5-4 Define the business market and identify the major factors that influence business buyer behavior.
The business market is composed of all organizations that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit. As compared to consumer markets, business markets usually have fewer but larger buyers who are more geo- graphically concentrated. Business demand is derived demand, and the business buying decision usually involves more, and more professional, buyers.
Business buyers make decisions that vary with the three types of buying situations: straight rebuys, modified rebuys, and new tasks. The decision-making unit of a buying organization—
the buying center—can consist of many different people play- ing many different roles. The business marketer needs to know the following: Who are the major buying center participants?
In what decisions do they exercise influence and to what degree? What evaluation criteria does each decision participant use? The business marketer also needs to understand the major environmental, organizational, interpersonal, and individual influences on the buying process.
OBJECTIVE 5-5 List and define the steps in the business buyer decision process.
The business buyer decision process itself can be quite involved, with eight basic stages: problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. Buyers who face a new task buying situation usually go through all stages of the buying process.
Buyers making modified or straight rebuys may skip some of the stages. Companies must manage the overall customer rela- tionship, which often includes many different buying decisions in various stages of the buying decision process.
OBJECTIVE 5-6 Discuss how online, mobile, and social media have changed business-to-business marketing.
Advances in information and digital technology have given birth to “ e-procurement,” by which business buyers are pur- chasing all kinds of products and services online. Business mar- keters are increasingly connecting with customers online and through digital, mobile, and social media to engage customers, share marketing information, sell products and services, pro- vide customer support services, and maintain ongoing customer relationships. Instead of the old model of sales reps calling on business customers at work or maybe meeting up with them at trade shows, the new digital approaches facilitate anytime, anywhere connections between a wide range of people in the selling and customer organizations.
DISCUSSION AND CRITICAL THINKING
Discussion Questions
5- 1. How do subcultures affect consumer purchase deci-
sions? Provide an example. (AACSB: Written and Oral Communication; Reflective Thinking)
5- 2. Provide examples of a situations in which environmen-
tal disruptions affected consumer attitudes and buying behaviors. (AACSB: Written and Oral Communica- tions; Reflective Thinking)
5- 3. Why do marketers want to understand the customer jour-
ney? Provide an example of a customer journey. (AAC- SB: Written and Oral Communications; Reflective Thinking)
5- 4. How is need recognition triggered in the buyer decision
making process? Provide examples of the two different types of triggers. (AACSB: Written and Oral Commu- nication; Reflective Thinking)
5- 5. What are systems or solutions selling? How can an or-
ganization be successful in this area of sales? What are customers looking for from suppliers? (AACSB: Writ- ten and Oral Communication; Reflective Thinking)
5- 6. What is derived demand, and why is it important in
business-to-business marketing? Provide an example.
(AACSB: Written and Oral Communication) Business buying process
Derived demand Supplier development Straight rebuy
Modified rebuy New task Systems selling
(solutions selling)
Buying center OBJECTIVE 5- 6 E-procurement
Critical Thinking Exercises
5- 7. How would the buyer decision process for a sports fan
preparing to buy a pair of gloves to wear in the stands at a professional hockey game differ from that of a snowboarder purchasing a pair of gloves? How would you use this knowledge to develop an advertising plan?
(AACSB: Written and Oral Communication; Reflec- tive Thinking)
5- 8. Assess the Beyond Meat burger using each of the five
characteristics identified in the chapter as especially
important in influencing an innovation’s rate of adop- tion. Given its performance on each of these charac- teristics, what could Beyond Meat’s marketers do to increase the product’s rate of adoption?
5- 9. Your manager suggests you do everything in your pow-
er to limit customer complaining. Make an argument about why your firm should encourage consumers to complain. (AACSB: Written and Oral Communication;
Reflective Thinking)
MINICASES AND APPLICATIONS
Digital Marketing Blogvertorials
Bloggers can be highly influential. On the one hand, we read their pieces because we value their opinions and ideas, but on the other, do we really know their motivations? There is a growing trend for social media and public relations agencies to approach bloggers to get them to “blogvertize” on their behalf. The agen- cies also insist that such bloggers make no mention of the fact that they are being paid to make positive statements about certain products and services. In the United Kingdom, the Advertising Standards Authority (ASA) state that it is acceptable for a blog- ger to receive payment for a positive review, but the blogger has to be clear that they are advertising. The ASA suggests signpost- ing paid-for posts. It argues that just like any other media, con- sumers need to be able to judge whether or not they are seeing an advertisement. The clear rules are that advertisements must be obviously identifiable as such and not likely to mislead.
5- 10. Have you encountered this type of blog posting be-
fore? Was it clear that the post was an advertisement?
How might the fact that the blogger is being paid for an opinion change your view? Write a brief report of your observations. (AACSB: Use of IT; Communica- tion; Reflective Thinking)
5- 11. Are there clear rules in your country concerning blog-
vertorials, such as the U.S. Federal Trade Commis- sion’s disclosure rules on using social media for the promotion of products and services? If yes, can the rules help in controlling blogvertorials written in other countries? What sanctions should be imposed on those who promote blogvertorials without calling them so?
(AACSB: Communication; Reflective Thinking)
Marketing Ethics Cashless Pizza Restaurant
A recent retailing movement is cashless stores, which align with the consumer trend away from cash purchases in favor of purchases with debit cards, credit cards, or electronic pay- ments like Apple Pay and Google Pay. Stores and restaurants feel going cashless makes transactions faster, reduces their risk of theft, and cuts costs associated with money manage- ment. However, critics of cashless retailers say they discrimi- nate against consumers who avoid bank accounts and credit cards, which often includes consumers with poor credit or undocumented immigrants. Consider whether a specific pizza
restaurant near your university should go cashless.
5-12. What factors are likely to influence whether consumers
in your market choose to do business with the pizza restaurant that does not accept cash? (AACSB: Written and Oral Communication; Reflective Thinking)
5-13. Discuss the ethical challenges surrounding the pizza
restaurant’s decision to go cashless. (AACSB: Written and Oral Communication; Ethical Understanding and Reasoning)
Marketing by the Numbers Evaluating Alternatives
One way that consumers can evaluate alternatives is to identify important attributes and assess how purchase alternatives perform on those attributes. Consider the purchase of a tablet. Each at- tribute, such as screen size, is given a weight to reflect its level of importance to that consumer. Then the consumer evaluates each alternative on each attribute. For example, in the following table, price (weighted at 0.5) is the most important attribute for this consumer. The consumer believes that Brand C performs best on price, rating it 7 (higher ratings indicate higher performance).
Brand B is perceived as performing the worst on this attribute (rat- ing of 3). Screen size and available apps are the consumer’s next most important attributes. The operating system is least important.
A score can be calculated for each brand by multiplying the importance weight for each attribute by the brand’s score
on that attribute. These weighted scores are then summed to determine the score for that brand. For example, Score Brand A = (0.2 × 4) + (0.5 × 6) + (0.1 × 5) + (0.2 × 4) = 0.8 + 3.0 + 0.5 + 0.8 = 5.1. This consumer will select the brand with the highest score.
5-14. Calculate the scores for brands B and C. Which brand
would this consumer likely choose? (AACSB: Com- munication; Analytic Reasoning)
5-15. Which brand is this consumer least likely to purchase
from? Discuss two ways the marketer of this brand can enhance consumer attitudes toward purchas- ing its brand. (AACSB: Communication; Reflective Thinking; Analytic Reasoning)
See Appendix 1 for cases appropriate for this chapter.
Case 5, Kraft Heinz: A Former Taste Maker Now Struggles as Consumer Tastes Change. Facing unprecedented changes in consumer tastes, Kraft Heinz is fighting to maintain its historic role in the packaged foods industry.
Case 1, Buffalo Wild Wings: Fueling the Sports Fan Experience. With a mission to “WOW people every day,”
Buffalo Wild Wings serves up more than wings and beer. It is in the business of providing the best customer experience possible for sports fans.
Case 11, Ulta Beauty: Where the Experience Is Beautiful.
As the largest U.S. beauty retailer, customers of all kinds enthusias- tically flock to Ulta because more than any other retailer, it offers a complete beauty experience.
Company Cases 5 Kraft Heinz/1 Buffalo Wild Wings/11 Ulta Beauty
Alternatives Considered Attributes
Importance
Weight (e) A B C
Screen size 0.2 4 6 2
Price 0.5 6 3 7
Operating System 0.1 5 5 4
Apps available 0.2 8 6 7
6 Creating Value for Target Customers
Customer Value–Driven Marketing Strategy
Previewing the Concepts
So far, you’ve learned what marketing is and about the importance of understanding con- sumers and the marketplace. We now delve deeper into marketing strategy and tactics. This chapter looks further into key customer value–driven marketing strategy decisions—dividing markets into meaningful customer groups (segmentation), choosing which customer groups to serve (targeting), creating market offerings that best serve targeted customers (differentia- tion), and positioning the offerings in the minds of consumers (positioning). The chapters that follow explore the tactical marketing tools—the four Ps—by which marketers bring these strategies to life.
To open our discussion of segmentation, targeting, differentiation, and positioning, let’s look at Henkel. For nearly 140 years, Henkel has wielded a leader’s influence with its varied offering of products that address the specialized needs of global customers. Henkel’s brand Persil has revolutionized the Middle Eastern market through sophisticated segmentation and targeting, with each product line offering a unique value proposition to a distinct segment of customers.
OBJECTIVE 6-1 Define the major steps in designing a customer value–driven marketing strategy: market segmentation, targeting, differentiation, and positioning.
OBJECTIVE 6-2 List and discuss the major bases for segmenting consumer and business markets.
OBJECTIVE 6-3 Explain how companies identify attractive market segments and choose a market-targeting strategy.
OBJECTIVE 6-4 Discuss how companies differentiate and position their products for maximum competitive advantage.
Objectives Outline
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By focusing on generating insights to understand market trends and customers’ special needs in different regions, Henkel
found huge success with its brands in the Middle East.
Persil’s success in the Middle East is predominantly due to a deep understanding of the regional consumers’ needs and preferences.
Medicimage Education Services Limited/Alamy Stock Photo
Henkel’s Persil in the Gulf States
Henkel AG & Company, KGaA, a well-known German multina- tional company active both in the consumer and industrial sec- tor, was founded in September 1876 by Fritz Henkel in Aachen, Germany. The first product it launched was a silicate-based uni- versal detergent; ever since, the company has been successful through continuous innovation in new products that satisfy a range of diverse customers and their different needs and prefer- ences across the globe. Today, Henkel—which is headquartered in Düsseldorf, Germany—is globally ranked among the Fortune Global 2000 companies. In the fiscal year 2020, Henkel reported sales of $22.75 billion. As of 2021, its regional sales from North America was 27 percent, Western Europe 30 percent, and emerg- ing markets 40 percent. In 2016, Henkel was the only German company in the Top 50 of the world’s biggest consumer-goods manufacturers worldwide according to consulting firm OC&C’s study “Trends and Strategies on the Consumer-goods Market.”
Henkel solidified its status as one of the most reputable com- panies in its industry category in Fortune’s 2018 “World’s Most Admired Companies” ranking, where it finished in fourth place.
The company primarily deals in adhesive technologies, beauty care, and laundry & home care. As of 2020, its adhesive technol- ogies business constituted 45 percent of the business, followed by laundry and home care at 35 percent, and beauty care at 19 percent. Some of its popular brands include Loctite, Technomelt, Schworzkopf, Dial, Syoss, Persil, and Berf.
Henkel’s force of around 53,000 employees worldwide is work- ing hard to gain the trust of a customer base in more than 120 countries. Since its invention in 1907, Persil has been regarded as the expert in sparkling clean laundry. Its name has stood for quality and trust, making it, for example, Germany’s most trusted laundry detergent. The Persil product line has included many successful products since it was first introduced in the market back in 1907 and revolutionized the laundry process. The prod- uct combined sodium silicate with sodium perborate, which re- leases fine pearling oxygen when the laundry is boiled. The result is an especially textile-friendly and odorless bleach, in contrast to the chlorine used till then. It also reduces the strenuous and time-consuming rubbing, swinging, and scrubbing of laundry that had hitherto been the norm. The first self-acting detergent was born: Persil.
Over its history, Henkel has wielded a leader’s influence through different brands and technology, enabling people to live easier and better lives. The company has managed to success- fully capitalize on its customer-driven “glocal” marketing strategy, blending global understanding with local implementation, as in Saudi Arabia, which is one of the Gulf Cooperation Council (GCC) countries. The other member states are Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates. Each of these coun- tries has very different needs based on its culture. Saudi Arabia offers an excellent example that illustrates Henkel’s marketing strategy in more depth.
Since its foundation, Henkel Saudi Arabia has enjoyed tremen- dous growth, and its workforce is currently comprised of more than 1,600 people, with Persil cornering 75
percent of the market. During its early days in the region, Henkel faced challenges due to social, political, and regulatory is- sues and also due to the different ways of doing business.
However, over time Henkel has under- stood and appreci- ated the regulations related to the culture and customers in the KSA and the wider region. It has learned to adapt to the market to capitalize on the opportunities it presents.
As Amitabh Bose, the former Marketing Head of Henkel Saudi Arabia, notes, Henkel’s brand presence is epitomized by the success of its premium laundry detergent Persil, which has revolutionized the Middle Eastern market with its focus on developing strong brand eq- uity, generating consumer insights, and evolving outstanding market- ing campaigns. The Saudi Arabia region was targeted by Henkel a