Customer Analysis Buying Behavior and Segment Qt i On

5/27/2018 Customer Analysis Buying Behavior and Segment Qt i On

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MBA ProMACustomer Analysis, BuyingBehavior and Segmentation

Professor Hossein Dadfar


Customer Analysis

What do you need to know about yourcustomers?


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What you need to know

Who buys the product / service

Who uses the product / service

What customers buy

How they use the product/services

Where customers buy

When customers buy How customers choose

Why they prefer a product

How they respond to marketing programs

Will they buy it (again)?


Who buys and uses product /service

A collection of actors/individuals suchas:

Initiator (identifies need for product /service)

Influencer (provides info or preference)

Decider (decides on spending the money)

Purchaser (makes the purchase)

User


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Example: Replacement ofproduction machines

Initiator: more convenient and efficientmachines

Influencer: production manager wantgood efficiency and happy employees

Decider: administrator wants low cost

Purchaser: agent wants good contract

User: Operators want reliable andfriendly usage machine


Example: summer vacation

Initiator: child wants fun

Influencer: cousin wants place he has

found Decider: father wants low cost

Purchaser: mother wants happy family

User: whole family wants to enjoythemselves


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Expanded 5-W Model forCustomer Analysis

Who are your current and potential customers?

Who are your former customers???


5-W Model, continued

What do your customers do with yourproducts?


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5-W model, continued

Where do your customers purchase yourproducts?



When do your customers purchase yourproducts?


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Why (and how) do your customersselect our products?


Why do they buy from you?Why do they buy from you?

Industrial Buyers MotivationIndustrial Buyers Motivation

Rational motives

Price

QualityTechnology

Knowledge

Service

Continuity of Supply

Reciprocity

Others

Emotional motives

Status and rewards

Perceived risk

Friendship


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In Short, what you need toknow

What you need to know is buyingbehavior


THE HEART OF Industrial MARKETING

THE HEART OF Industrial MARKETING

HOWAND WHYORGANIZATIONS BUY AND HOWTHEY CAN BE INFLUENCED


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Industrial vs. Consumer buyingBehavior?

I INDUSTRIAL. BUYING CONSUMER BUYING

DECISION IS MADE BY A GROUP OF FREQUENTLYPEOPLE (DMU ) ONLY BY ONE PERSON

DIFFERENT NEEDS AND OBJECTIVES MAINLY THE BUYER'SMUST BE FULFILLED NEEDS

PROCEDURES, FORMALITIES ARE NO FORMALITY

COMPLEX SIMPLE

DECISIONS ARE VERY OFTEN STRATEGIC ROUTINE, OFTENHABITUAL


Important Issues in Ind. BuyingBehavior

Purchase characteristics

Organisational characteristics

.Group characteristics

.Participant characteristics

.Process or stages

.Seller characteristics

.Informational characteristics

.Buyer-Seller relationships

.Environmental characteristics

.Conflict/negotiation tactics

.Communication networks

.Decision rules

Roles stress


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Business Buying Behavior

Customer Service

Customer Service

Purchasing Ethics/

Rules and regulations

Purchasing Ethics/Rules and regulations

Buying Situations

Buying Situations

Evaluation Criteria

Evaluation Criteria

Buying Centers

Buying Centers

Aspects ofBusinessBuying

Behavior

Aspects ofAspects ofBusinessBusinessBuyingBuying

BehaviorBehavior

Buying process


Buying Centers

Initiator Decider

UsersGatekeeper

Influencer/Evaluator

PurchaserBuyingCenterRoles


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Buying Situations

New Buy

New Buy

ModifiedRebuy

ModifiedRebuy

StraightRebuy

StraightRebuy

A si tuation requiring the purchaseof a product for the first t ime.

A si tuation requiring the purchaseof a product for the first t ime.

A situat ion where the purchaser wantssome change in the original good or

service.

A situat ion where the purchaser wantssome change in the original good or

service.

A si tuation in which the purchaserreorders the same goods or services

without looking for new information orinvestigating other suppliers.

A si tuation in which the purchaserreorders the same goods or services

without looking for new information orinvestigating other suppliers.


Buying Decision GridType ofBuying

Situation

Newness ofthe Problem

InformationRequirements

Considerationof New

Alternatives

New Task High Maximum Important

ModifiedRebuy

Medium Moderate Limited

StraightRebuy

Low Minimal None


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Buying Situation Implications

Timetakenfordecision

No of people involved in buying centre

Straight

Rebuy

New

Task

Modified

Rebuy


Buying Decision GridType of Buying

Situation

Newness of the

Problem

Information

Requirements

Consideration

of New

Alternatives

New Task High Maximum Important

ModifiedRebuy

Medium Moderate Limited

Straight Rebuy Low Minimal None


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New Task (rarest, mostglamorous)

Big DMU (decision-making unit)

lots of people involved in the decision

lots of people indirectly influence the decision

Slower-than-usual process

people think its a risky buy; novelty, precedent

Gather and weight a lot of information

Anyone can win

Your past relationship along wont win the order


New Task (continued)

Performance matters a lot, price doesnt so much

The most influential people are knowledgeable

users technically competent

They set the specifications & then the game is

75% over

Low ranking experts can be very influential

High ranking non-experts often stand back


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Effective Salespeople in New Task

Listen, probe

Understand DMU

Understand needs, perceptions of you and of

competitors

In early, influencing specifications & views of the

competitors

Come to be viewed as consultants (creepingcommitment)

Spend lots of time

Analyze a lot

Bring in support troops


Straight Rebuy

Small DMU (usually one person)

Perceived low risk, hence low priority

In a hurry

Close-minded, arrogant, think they know it all

Go on minimum acceptable quality (better doesnt help)

Then price and assured delivery


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Straight Rebuy

In Supplier

Out suppliers find it hard to get an appointment, let alone break

in

Pray for the in supplier to screw up noticeably or for

requirements to change (pressure from users, staff)


Modified Rebuy

A window of opportunity

An aging new task

Or a rejuvenated straight rebuy

Mini-version of new task strategy can make you the in

supplier

Then dont screw-up


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Ind. Buying Behavior Models

Task Models

Non-Task Models

Process Models

Complex Models


Ind. Buying BehaviorComplex Models

Bbuying behavior (B) is a function of individual

attributes (I), group factors (G), organizational

characteristics (O), and environmental factors (E) as

expressed in the following equation:

B = f (I,G,O,E)


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Physical environment

Technologicalenvironment

1 The environment (environmental determinants of buying)

Economic environment

Politicalenvironment

Legal environment

Culturalenvironment

Suppliers Customers G ov er nme nt La bo ur u ni on s Trade

associations

Professional

groups

Other

Business firms

Other social

institutions

Information aboutsuppliers Availabilityof General business Valueand norms

(marketin g commu nication goods a nd services conditions

Organisational

technology

Technology

relevant for

purchasing

Technological

constraints and

technology

available to

the group

Organisational

structure

Organisationof

the buying center

and the purchasing

function

Group

structure

Organisational

goals and tasks

Buying tasks

Group tasks

Organisational

actors

Members of the

buying center

Member

characteristics,

goals and

leadership

2 The organisation (organisational determinants of buying behaviour)

The organisational climate Physical Technological Economic Cultural

3 The buyingcenter (interpersonal determinants of buying behaviour)

Activities Interactions Sentiments Activities Interactions Sentiments

Group processes

4 The individual participants

Motivation Cognitivestructure Personality Learningprocess Perceivedroles

Buying decision process: 1. Individual decision-making unit 2. Group decision-making unit

Buying

Decision

NontaskTask

Webster and Wind

Model


Organisational Buyer Behaviour Process

Need recognition

Determine specifications (general)

Determine specification (specific)

Search

Evaluation

Selection

Post-purchase evaluation


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Participants in theBusiness Buying Process

Gatekeepers

Initiators

Buyers

Influencers

Deciders

Users

Approvers


Figure 8-1: Major Influences onIndustrial Buying Behavior


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Figure 8-2: Major Influences on

Industrial Buying Behavior


Dadfar Process ModelIndustrial buying behavior (purchasing process) model

Dimensions

Process TechnicalCommercial(Economic) Social

Initiation/needrecognition

Specificationdevelopment

Search/primary

selection

Negotiation

Final selection

Contracting/establishmentof order

Receipt andacquisition

Evaluation

DECISION-MAK

INGBEHAVIOR

IMPLEMENTATIONBEHAVIOR

(Stages)

Fig. 3.1


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Issues Frequently Negotiated BetweenIndustrial Buyers and Sellers

Example of variables describing the dimensions of negotiation for purchasing

industrial capital goods.

________________________________________________

1 .Commercial

a. Price

b. Delivery

c. Terms of payment

2. Social:

a. Feeling confidence in the other party

b. To allowing parties to get to know each other

3.Technical

a. Ensuring the product fits with technical need

b. Technical modification

c. Technical training

d. Technical capability of supplier

_________________________________________________


Variables for dimensions of Buying behaviorExample of variables describing each dimension of buying behavior

____________________________________________________

1. Commercial

a. Price

b. Short delivery time

c. Credit facility

d. Reciprocity of transaction

2. Social

a. Personal feeling of confidence

b. Ease of communication

c. Salesman's personality

d. Friendship with supplier's personnel

e. Equipment not taboo

f. Prestige of dealing with supplier

3. Technical

a. Past experience with the equipment

b. Quality- technical advantages

c. Technical modification of equipmentease of

installation in existing system

e. Ease of operation

f. Ease of maintenance

d.Technical information

g.Training aid

___________________________________________________


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Dadfars Model for Industrial Buying Selling Interactionand Process


Webster and Wind, 1972

Models of industrial buying behavior

1. Identification of need

2. Establishing specification &

scheduling the purchase

3. Identifying buying alternatives

4. Evaluating alternative buying

actions

5. Selecting the suppliers

User

Infl

uen

cer

Buy

er

Decid

er

Gatek

eep

er


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Type of buying situationBUYPHASES TYPE OF BUYING SITUATION

NEW TASK MODIFIED-

REBUY

STRAIGHT-REBUY

1. Anticipation or

Recognition of aproblem (Need) and a

General Solution

Yes Maybe No

2. Determination of

Characteristics andQuantity of Needed item

Yes Maybe No

3.Description ofCharacteristics and

Quantity of Needed item

Yes Yes Yes

4.Search andQualification of

potential Sources

Yes Maybe No

5. Acquisition andAnalysis of Proposals

Yes Maybe No

6. Evaluation ofProposals and Selection

of Supplier

Yes Maybe No

7. Selection of an order

Routine

Yes Maybe No

8. Performance

Feedback andEvaluation

Yes Yes Yes

Complex buying

decisionsPurchasing is Routine

Complex buying

decisionsPurchasing is Routine


Market Segment

A group of existing or potential

customers sharing some common

characteristic that is relevant in

explaining or predicting their response

to a companys marketing program.


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Market Segmentation

Identify sub-markets within market

Decide which one(s) to pursue (target)

Design marketing mix(es) to be attractive totargeted segment(s)


Segmentation Bases

Company size

Company location

Industry Technology (used)

Policies (purchasing)

Product application

Benefits sought

Buying center characteristics


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Segmentation Bases

Company size

Company location

Industry

Technology (used)

Policies (purchasing)

Product application

Benefits sought

Buying center characteristics


Business MarketingSegmentation

Geographic

Customer Type

Customer Size

Product UseBusinessMarkets

BusinessBusinessMarketsMarkets

Purchasing Criteria

Purchasing Strategy

Importance

PersonalCharacteristics

Micro-segmentation

Micro-segmentation

Macro-segmentation

Macro-segmentation

5

5


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Macrosegmentation

The process of dividing

business markets into

segments based on general

characteristics such as

geographic location, customer

type, customer size, and

product use.

5

5


Microsegmentation

The process of dividing

business markets into

segments based on thecharacteristics of decision-

making units within a

macrosegment.

5

5


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Macro Vs. Micro Segmentation

1. Large, Medium or Small

2. Local, National, regional, worldwide

3. Metal industries, Process industries,

construction industries.

4. Defined by product or service

Quallity, delivery, supplier reputaion, price,

Complexity, hierachical

Long, short

New task, straight or modified rebuy

Centraized, decentralized

Macro Segmentation

1. Size of Organization

2. Geographical

3. Industrial Sector

4. End Market served

Micro Segmentation

Choice cheriteria

Structure of decision-making unit

Decision-making process

Buying situation

Type of purchasing org.

ExampleVariable


Nested Approach

DemographicOperating variables

Purchasing

approaches

Situational factorsPersonal Characteristics


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Demographic Variables

Industry, Company Size (Large, SMEs) , Location

Operating Variables

Technology, User or Nonuser status (light, medium, heavy users)

Customer requirements (few services or extended requirements)

Purchasing Variables

Purchasing function approach (centralized or decentralized), Power

structure( technology top, finance top, marketing top), Nature of

existing relationships( old firms or new firms), general purchasing

policies ( leasing, service contracts, sealed bidding ) , purchasing

criteria (quality, service, price)

Situational Factors

Urgency of requirement, size of order

Personal Characteristics

Loyalty, attitude toward risk, some similarities between buyer-seller


AwarenessIve heard of you

FamiliarityI know who you are

ImageI know what you stand for

InclinationIll look for you

TrialShow me what you can do

ReinforcementDid I make the right decision

SatisfactionI like you

ReferralIll tell my friends to try you

Quality, Service--ProductPerformance counts!

LoyaltyIll buy your product first

The Consumer Thought Process: Marketing News, August 4, 1997

Documents

Customer Analysis Buying Behavior and Segment Qt i On