Understanding the Terrain: Markets and Purchasing Behaviour
Summary
This chapter provided a comprehensive overview of markets and purchasing behaviour in both consumer and organizational contexts.
Key Takeaways
- Markets can be categorized into consumer (B2C) and organizational (B2B) markets, each with distinct characteristics and buying behaviours.
- Consumer decision-making is a complex process influenced by various models, including the economic man theory and the stimulus-response model.
- The consumer decision-making process typically involves five stages: need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation.
- Consumer buying behaviours can be classified into four types based on involvement level and perceived brand differences: complex, dissonance-reducing, habitual, and variety-seeking.
- Factors influencing consumer decisions include situational factors, personal factors (demographics, lifestyle, personality), psychological factors (motivation, perception, learning, beliefs, attitudes), and social factors (family, reference groups, culture).
- Organizational buying behaviour involves multiple decisionmakers and a more complex purchasing process compared to consumer markets.
- The B2B buying process typically includes eight stages, from problem recognition to performance review.
- Understanding the nuances of both consumer and organizational buying behaviour is crucial for developing effective marketing strategies in the tourism, hospitality, and service industries.
By mastering these concepts, marketers can better navigate the complex terrain of consumer and organizational markets, leading to more effective marketing strategies and improved business outcomes.
Exercises
Check your understanding
Exercise 1: Analyzing Consumer Buying Behaviour
Scenario: A new coffee shop in Toronto wants to understand the buying behaviour of its customers to improve its marketing strategy.
Task: Identify the type of consumer buying behaviour most likely associated with purchasing coffee and explain the factors influencing this behaviour.
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- Type of Buying Behaviour: Habitual buying behaviour
- Factors Influencing Behaviour:
- Situational Factors:Â Location convenience and time of day.
- Personal Factors:Â Lifestyle (e.g., preference for quick service).
- Psychological Factors:Â Brand perception and past experiences.
- Social Factors:Â Influence from peers or social media.
Exercise 2: Applying the Stimulus-Response Model
Scenario: A hotel chain wants to increase bookings by using targeted online advertisements.
Task: Using the stimulus-response model, outline how the hotel can influence consumer decision-making through marketing stimuli.
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- Stimuli:
- Marketing Stimuli: Attractive images, special offers, and an easy booking process.
- Environmental Stimuli:Â Reviews and ratings on travel websites.
- Black Box (Consumer Processing):
- Consideration of personal preferences and past experiences.
- Response:
- Increased likelihood of booking due to appealing stimuli and positive perceptions.
Exercise 3: Understanding B2B Markets
Scenario: A resort is looking to purchase new furniture for its outdoor spaces.
Task: Identify the key stages in the B2B buying process for this purchase and explain each stage briefly.
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- Problem Recognition:Â Identifying the need for new furniture due to wear and tear.
- General Need Description:Â Specifying requirements like durability and style.
- Product Specification:Â Detailed features such as material and dimensions.
- Supplier Search:Â Researching potential suppliers.
- Proposal Solicitation:Â Requesting bids from shortlisted suppliers.
- Supplier Selection:Â Choosing a supplier based on price and quality.
- Order-Routine Specification:Â Finalizing order details like delivery terms.
- Performance Review:Â Assessing supplier performance post-purchase.
Exercise 4: Cultural Influences on Consumer Behaviour
Scenario: A Canadian tour operator wants to expand into Japan.
Task: Discuss how Hofstede’s cultural dimensions theory might affect marketing strategies in Japan compared to Canada.
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- Individualism vs. Collectivism:Â Emphasize group tours in Japan (collectivist culture) versus personalized experiences in Canada (individualist culture).
- Uncertainty Avoidance: Provide detailed itineraries in Japan where there is a higher uncertainty avoidance.
- Long-term Orientation:Â Focus on building long-term relationships with Japanese customers.
Exercise 5: Evaluating Personal Factors
Scenario: A luxury hotel is targeting high-income travelers for its new spa services.
Task: Analyze how personal factors such as lifestyle and personality might influence these consumers’ purchasing decisions.
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- Lifestyle Influence:Â High-income travelers may prioritize wellness and relaxation, aligning with spa services.
- Personality Traits:
- Openness to Experience: Attracted to unique spa treatments.
- Conscientiousness: Preference for high-quality, reliable services.
- The hotel’s marketing should highlight exclusive, personalized experiences that cater to these traits.
Exercise 6: Multiple Choice Questions
Glossary of Key Terms
B2B (Business-to-Business): A type of transaction or business model where businesses sell products or services to other businesses.
B2C (Business-to-Consumer): A type of transaction where businesses sell products or services directly to consumers.
Buying Centre: A group of individuals within an organization who are involved in making purchasing decisions for the company.
Consumer Decision-Making Process: The series of steps consumers go through when deciding to purchase a product or service, typically including need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation.
Culture: The shared beliefs, values, customs, and behaviours of a group or society that influence consumer behaviour.
Derived Demand: The demand for a product or service that results from the demand for another product or service.
Economic Man Theory: An early model of consumer decision-making based on principles of economics, assuming consumers are rational and self-interested individuals.
Exchange Process: The act of obtaining a desired object from someone by offering something of value in return.
Herzberg’s Two-Factor Theory: A theory distinguishing between dissatisfiers (hygiene factors) and satisfiers (motivators) in consumer behaviour.
Hofstede’s Cultural Dimensions Theory: A framework for understanding cultural differences across countries and their impact on behaviour and values.
Lifestyle: A person’s pattern of living as expressed through their activities, interests, and opinions (AIOs).
Maslow’s Hierarchy of Needs: A theory explaining why people are driven by particular needs at specific times, arranged in a hierarchy from physiological needs to self-actualization.
Organizational Markets: Markets consisting of businesses, governments, and institutions that purchase goods and services for use in their operations or to resell to others.
Perception: The process by which individuals select, organize, and interpret stimuli to form a meaningful picture of the world around them.
Reference Groups: Groups of people that an individual looks to for guidance on social norms, values, and behaviours.
Selective Attention: The tendency of consumers to notice stimuli that relate to their current needs or interests.
Selective Distortion: The tendency of people to interpret information in a way that supports their existing beliefs.
Selective Retention: The tendency of individuals to remember information that aligns with their attitudes and beliefs.
Stimulus-Response Model: A framework used to understand how consumers make purchasing decisions, assuming that consumer behaviour is a response to various stimuli.
Types of Consumer Buying Behaviour: Classifications of consumer buying behaviours based on involvement level and perceived brand differences, including complex, dissonance-reducing, habitual, and variety-seeking behaviours.
