JOHANSSON - chap (7)

8/7/2019 JOHANSSON - chap (7)

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Understanding Local Buyers

Ch

ap

ter

7

2006 The McGraw-Hill Com anies Inc. All ri hts reserveMcGraw-Hill Irwin


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Outline

Local Buyer Behavior Basics

The Consumer Decision Process

Local Market Research

The B2B Industrial Buyer

Three Market Environments

Takeaways.


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Culture and Buyer Behavior

Marketing and Materialism

Marketing actions are basically undertaken in the belief that

more and better goods will bring an increase in consumers

standard of living, an increase in their satisfaction, and perhaps

even more happiness

However, when anticipating customers reactions to new

products and increased product choices, it is important to note

the limits on the relationship between material affluence and

personal happiness

Money cant buy you love.


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External

Influences

Culture

Economics

Technology

Politics

Buyer

characteristics

Models of ManProduct choice

Brand choice

Store choice

Supplier choice

Buyer Choices

Buyer

decisionprocess

Local

Marketing

Effort

Local Buyer Behavior


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James Duesenberry - Relative Income hypothesis

consumers well-being is a function of how much income they

have relative to their peer groups, not the actual income

Milton Friedman Permanent income, defined as the

regularly expected income, is what determines an individuals

consumption

Thorstein Veblen Conspicuous consumption the notion

that people make purchases of expensive brands & products

in order to display their ability to afford them



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What does the product/service do for the buyer?

How does it fit into the consumption and use

pattern of the buyer?

What are the core benefits?

What is the perceived risk and how high is it?

The CORE BENEFIT often differs between local markets.

The generic function of a product depends more on the

local environment than on innate individual preferences.

Remember: Buyers are GOAL-ORIENTED

they buy for a reason. Point is to

understand what that reason is.



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Problemrecognition

Search

Evaluation

of

alternativesChoice Outcomes

The Buyer Decision Process


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Problem Recognition

A problem is when an individual perceives a difference

between an ideal and an actual state of affairs

New products often lead to tension and a recognizedproblem

For the local marketer it is important to recognize that

education about the core benefits might be necessary in

order to create a demand for the product


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SearchA consumers search for alternative ways to solve the

problem is closely related to his or her level of involvementwith the product category

For product with which involvement is high, search tends tobe more comprehensive and time consuming

For convenience and habit purchases, the decision processis shorter, with little need for extensive searches oralternative evaluations

Search intensity is dependent on the perceived availabilityof the alternativeOne advantage for product with high global brand awareness

is that initial distrust is easier to overcome


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Evaluation of AlternativesWhen a new product or service is in the consideration setA highly involvedindividual will process the available

information matching the pros and cons of the alternatives

against preferencesConsumers can deal with multi-attribute evaluations in

several ways:They can use gradually less-important features to successively

screen out alternatives

A hierarchical decision rule

They can consider all features simultaneously:

A compensatory rule hard to do.


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Multi-attribute

evaluation

(BI)

Preference

Behavioral

intent

Choice

Socialnorms

Social

forces

Motivation

to comply Situational

factors

(P-O-P)

B = beliefs about product attributes; I = importance of the beliefs; P-O-P =

point of purchase

Fishbeins Multi-attribute Model


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ChoiceThe final choice of which alternative to select or try is

typically influenced by social norms and by situationalfactors

Social NormsWhere group pressures to comply are strong social norms

influence is expected to override multiattributed evaluation

The social norms can be usefully analyzed by theextended Fishbein model

The social norms involve two aspects

Social forces

Motivation to comply


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OutcomesThe main question about the outcomes revolves around the

degree of customer satisfaction.

Customer satisfaction is particularly important in mature

markets where choices are many and the needs are already wellmet.

Satisfaction engenders loyalty to the brand and to the company.

Because buying is typically a risky choice between differentbrands, the marketer has to make sure that the customer does not

encounter cognitive dissonance, a sense of possibly making thewrong choice.

One approach is to get satisfied customers to endorse theproduct, a common strategy in advertising.


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A Strong Brand Simplifies theDecision Process

-- REDUCES INFORMATION SEARCH

-- REDUCES PERCEIVED RISK

-- PLACES A BRAND IN THE EVOKED

CONSIDERATION SET MORE EASILY -- BRAND LOYALTY MEANS DECISIONS GO FAST.

AGLOBAL BRANDCAN FOCUS ON:

-- ATTITUDES

-- NORMS

-- P-O-P (Point-of-Purchase Promotions)


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Problem

definition

Sampling

Research

design

Measurement/

scaling

Exploratory

Descriptive

Causal Trade surveys

Observation

Experiments

Causal Models

Secondary data

Qualitative

research

Consumer

surveys

Questionnaire

construction

FieldworkData

analysis

The Local Market Research Process


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FOCUS GROUPS

Focus groups have become standard for initial exploratory

research

In foreign markets, focus groups have the advantage of

being relatively inexpensive, can be completed quickly, and

can reach local pockets of the market

Unfortunately, they can also constitute an unrepresentative

sample because typical screening criteria are incorrect in the

new environment or are not implemented correctly



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SURVEY RESEARCH

Consumer Surveys

Surveys of large (n = 500 and above) random samples drawn from a

sampling frame of representative product users are of central

importance in marketing research

Cultural problems involved in the typical consumer survey:

In high context cultures especially, one cannot fully understand

consumers from their responses to standard survey questions.

At the same time, informal face-to-face interviews are prone to bias

because of demand characteristics

However, even if surveys are afflicted by a number of problems in

many foreign markets, they can still be useful if care is taken.



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TRADE SURVEYS

Trade surveys of distribution channels and trade associations can

provide a good starting point for further data gathering and analysis

In the U.S., the use of middlemen for information about consumers is

usually limited to the sales and scanner records of retailers and

wholesalers

In countries with less social mobility and less diversity than the U.S.,key informants in the trade are good sources of information about

buyers.



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MEASUREMENT & SCALING

In attitude scaling, very basic factors can create

difficulties

The cognitive and emotional concepts measured

might not be equivalent across cultures.

This means measurement equivalence is

questionable.



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The questionnaire employed in the typical consumer surveyneeds to be carefully pre-tested & translated into the foreign

language.

It should then be back-translated for verification and

adjustment.

In high context cultures the questionnaires are typically muchlonger because of the need to establish the proper context for

the questions.


QUESTIONNAIRE CONSTRUCTION


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SAMPLING

Lack of comprehensive and reliable sampling frames has

long been a problem for marketing researchers in many

countries. Emergence of firms that specialize in developing lists for

direct marketing and survey research is gradually resolving

this problem.

Still sampling equivalence can be questionable because the

appropriate profiles differ (e.g. high income in one countrymight not behigh in another).



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Typically handled by a subcontracting marketing

research firm, sometimes a full-service advertising

agency

As economic growth occurs, mature markets with

differentiated demand requiring formal and

scientific market research applications will emerge

in many countries.

FIELDWORK



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Understanding Industrial Buyers

The Business-to-Business (B2B) Marketing Task:

The marketer should help the buying organization succeed.

Industrial Buyers are influenced by the same forces as

individual consumers, but also conditioned by the

organizational culture in which they operate.

The organizational culture reflects company policies and ways

of making decisions.

The industrial buying process involves several stages from

problem recognition to performance review.


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Performance review

Order specificationOrder specification

Supplier selection

Proposal solicitation

Search for suppliers

Product specificationProduct specification

Problem recognitionProblem recognition

Industrial Buying Process

I d t i l B B ildi


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Industrial Buyers: BuildingRelationship

Relationship Marketing is important in B2B.

The term is applied to a marketing effort involving

Various personalized services

Creation of new and additional services

Customizing a companys offering to the needs of a special

buyer

Takes a long-term view

Since without it, the effort required to build a relationship is

not worth it.


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ADOPT THE BUYERS VIEWPOINT.

GROW WITH THE RELATIONSHIP.

ACCEPT AND DEMAND TRANSPARENCY.

BE PROACTIVE.

THINGS A MARKETER CAN DO TO CREATE A

WORKABLE RELATIONSHIP:

Always consider how the culture of the nation and the culture of

the organization affect relationship marketing.

Relationship Marketing


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EMERGING NEW GROWTH MATURE

Three Market Environments


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Feature Emerging New growth Mature

Life cycle stage Intro Growth Mature

Tariff barriers High Medium Low

Nontariff barriers High High Medium

Domestic competition Weak Getting stronger Strong

Foreign competitors Weak Strong Strong

Financial ins titutions Weak Strong Strong

Consumer markets Embryonic Strong Saturated

Industrial markets Getting stronger Strong Strong

Political risk High Medium Low

Distribution Weak Getting stronger Strong

Media advertising Weak Strong In-storepromotion

Dominant Market Features


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product/market situationtask emerging new growth mature

marketing analysis

research focus feasibility economics segmentation

primary data sources visits middlemen respondents

customer analysis needs aspirations satisfaction

segmentation base income demographics life stylemarketing strategy

strategic focus market development participation in growth compete for share

competitive focus lead/follow domestic/foreign strengths/weaknesses

product line low end limited wide

product design basic advanced adapted

new product intro rare selective fast

pricing affordable status value

advertising awareness image value-added

distribution build-up penetrate convenience

promotion awareness trial value

service extra desired required

Dominant Marketing Tasks


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Understanding local markets involves conceptual skills &

imaginative rethinking more than new analyticalmarketing skills.

Takeaway

The core benefit of a product or service can vary

considerably across countries because of differingenvironmental conditions surrounding product usage.


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Consumer behavior concepts and models are useful tools

when examining buyers in foreign markets, but underlyingcultural assumptions have to be reconsidered.

Takeaway


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Local market research is difficult because of lack of data,

language problems, & cultural differences in how peoplerespond to surveys, but can be done with proper adaptation.

Takeaway


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In B2B the local marketer should help the buying

organization succeed, and make the buyer look good

Firms must take into account the culture of the purchasing

agent and the culture of the organization

Takeaway


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It is useful to distinguish between three market environments:

1. The MATURE market, where share and customersatisfaction define the strategies

2. The NEW GROWTH market, where the global marketer

needs to participate & all boats rise with the tide.

3. The EMERGING market, where the aim is market

development with a long time horizon.

Takeaway

Documents

JOHANSSON - chap (7)