MARKETING AND SALES MANAGEMENT
CHECK-POINT 2: BUYING BEHAVIOR

Please Select Any Topic In Check-Point 2 Below And Click.

  1. CLASSIFICATION OF THE BUYERS' MARKETS
  2. WHAT ARE THE KEY QUESTIONS RELATED TO THE BUYERS' MARKETS?
  3. WHAT IS THE CONSUMER MARKET?
  4. WHAT IS A STUDY OF THE CONSUMER BEHAVIOR?
  5. WHAT ARE THE MAIN CONSUMER BUYING BEHAVIOR FACTORS?
  6. WHAT IS THE CONSUMER DECISION-MAKING PROCESS?
  7. HOW DOES THE CONSUMER MARKET SPEND ITS MONEY?
  8. WHAT IS THE TREND IN THE CONSUMER MARKET AT PRESENT?
  9. WHAT IS THE ORGANIZATIONAL MARKET?
10. WHAT ARE THE CHARACTERISTICS OF ORGANIZATIONAL MARKETS?
11. WHAT IS AN ORGANIZATIONAL BUYING BEHAVIOR?
12. WHAT IS AN ORGANIZATIONAL DECISION-MAKING PROCESS?
13. WHAT IS AN INDIVIDUAL BUYING BEHAVIOR?

14.

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1. CLASSIFICATION OF THE BUYERS' MARKETS

THE BUYERS' MARKETS


Successful implementation of the marketing management process requires a thorough understanding of buying behavior in various buyers' markets. 

Buyers' Markets differ in their nature and size and are classified into several specific types, as illustrated below.  

CLASSIFICATION OF THE BUYERS' MARKETS

  The Consumer Market

 

 The Organizational Market


This market consists of all individuals and households that purchase products and services for personal use.

 


This market consists of all individuals and organizations that purchase products and services for a broad range of organizational or commercial purposes. 

The Organizational Market can be further sub-divided into two categories, as illustrated below.

 CLASSIFICATION OF THE ORGANIZATIONAL MARKET  

 The Government Market

 

 The Business Market


This market consists of local, state, and federal governmental organizations that purchase products and services to fulfill their functional objectives

 


This market consists of all individuals and organizations that purchase products and services for various commercial purposes

The Business Market can be further sub-divided into two categories, as illustrated below.

 CLASSIFICATION OF THE BUSINESS MARKET  

 The Producer Market

 

 The Reseller Market


This market consists of all individuals and organizations that purchase products and services for their own manufacturing needs and supply the produced goods and services to others at a profit.

 


This market consists of all individuals and organizations that purchase products with the sole purpose of reselling them to others at a profit, i.e. wholesalers and retailers.

2. WHAT ARE THE KEY QUESTIONS RELATED TO THE BUYERS MARKETS?

UNDERSTANDING THE BUYING BEHAVIOR


In order to understand the Buying Behavior in various markets, it is necessary to provide answers to a number of questions, as outlined below.

Once the marketing manager is able to find answers to these questions, it will provide a positive beginning to the marketing management process in your company.

 KEY QUESTIONS IN UNDERSTANDING THE BUYING BEHAVIOR

No.

Details

1

Who Buys?
What kind of people initiate the purchasing procedure and who places the actual purchase order?

2

What Do They Buy?
What kind of products or services are being purchased?

3

How Much Do They Buy?
In what quantities and how frequently are products or services being purchased?

4

How Do They Buy?
What procurement methods are being used during the purchasing procedure?

5

Why Do They Buy?
What are the reasons for purchasing specific products or services?

6

When Do They Buy?
Is there any particular time when people may need and, subsequently, buy products or services in larger quantities?

3. WHAT IS THE CONSUMER MARKET?

THE CONSUMER MARKET IN THE UNITED STATES


The Consumer Market
in the United States, with a population of around 275 million in the year 2001, and the highest prosperity in many years, has the largest number of buyers with money to spend. 

The Average Household Size is approximately 2.7 persons per family and the Median Age of the population is about 32 years.

The percentages related to the age distribution of the population in the United States are illustrated below. According to the U.S. Census Bureau, these projections are expected to change during the next 50 years.

PERCENT DISTRIBUTION OF THE U.S. POPULATION BY AGE

Age Group

2000

2005

2010

2030

2040

2050

Under 5

  7.4

  6.9

  6.6

  6.4

  6.4

  6.4

5-13

13.1

13.1

12.5

11.7

11.5

11.6

14-17

  5.6

  5.7

  5.9

  5.3

  5.3

  5.2

18-24

  9.5

  9.5

  9.8

  9.1

  9.2

  9.0

25-34

15.5

13.6

12.7

12.4

12.4

12.5

35-44

16.2

16.3

14.8

12.9

12.9

12.2

45-64

19.9

22.2

24.9

22.1

22.1

22.5

65-older

12.8

12.7

12.7

20.2

20.2

20.6

© U.S. Census Bureau, Current Population Reports

STATISTICAL INFORMATION ABOUT THE CONSUMER MARKETS


In addition, there is a continuous geographic shift of the U.S. population which affects the overall population growth in various states. The Projected Population Growth Rates in the United States during 1990 to 2000 are presented next.

Additional statistical information pertinent to consumer markets may be found in two main sources, as presented below.

THE PROJECTED POPULATION GROWTH RATES IN THE UNITED STATES

© Projected Population Growth Rates During 1990 - 2000, U.S. Department of Commerce, Bureau of Census

 MAIN SOURCES OF STATISTICAL INFORMATION
 ABOUT THE CONSUMER MARKETS

The U.S. Government 
Printing Office

 

The U.S. Bureau
Of Census

4. WHAT IS A STUDY OF THE CONSUMER BEHAVIOR?

THE CONSUMER BEHAVIOR


A successful implementation of the marketing management process requires of the marketing manager to understand various aspects of the Consumer Behavior

The study of the consumer behavior entails examination of several issues, as outlined below.(8)

KEY ASPECTS IN THE AREA OF CONSUMER BEHAVIOR 

No.

Details

1

Consumer behavior relates to the behavior of individual buyers in the marketplace and its purpose is to explain the manner in which they purchase and use products and services.

2

Consumer behavior is based on a multi-disciplinary approach and it is supported by information gained from various fields, such as psychology, sociology, and economics.

3

Consumer behavior entails evaluation of factors that influence the product or service buying decisions and product and service usage during the buying process and after the purchase has been made.

4

Consumer behavior is concerned with the buying process by which consumers reach buying decisions and how that process varies between  individuals in relation to products and services they buy.

5. WHAT ARE THE MAIN CONSUMER BUYING BEHAVIOR FACTORS?

THE CONSUMER BUYING BEHAVIOR


The consumer buying behavior is influenced by several types of factors that must be understood by the marketing and sales managers. 

The main Consumer Behavior Factors are illustrated below.

THE CONSUMER BUYING BEHAVIOR FACTORS

Strategic
Marketing
 Factors

 

Consumer's
Individual 
Factors

 

Social
 And Economic  
Factors

These factors include: 

  • Product

  • Price

  • Promotion

  • Place (Distribution)

 

These factors include:

  • Values 

  • Requirements 

  • Attitudes

  • Experience

 

These factors include 

  • Social factors

  • Economic factors

  • Family and friends

  • Lifestyle

6. WHAT IS THE CONSUMER DECISION-MAKING PROCESS?

 THE CONSUMER DECISION-MAKING PROCESS


The integral part of an ordinary buying behavior is the consumer decision-making process. This process, illustrated below, has a number of steps that enable the consumer to satisfy specific needs. 

STEPS IN THE CONSUMER DECISION-MAKING PROCESS

Step 1:  Identification Of The Problem.

The consumer identifies a specific problem and recognizes the need to solve it.

Step 2: Internal Search For A Solution.

The consumer evaluates existing knowledge and past experience in solving a similar problem.

Step 3: External Search For A Solution.

The consumer examines new information in the marketplace that may lead to solution of the existing problem

Step 4: Making A Buying Decision.

The consumer decides on the most suitable method of solving the existing problem.

Step 5: Evaluation Of The Buying Decision And Subsequent Action.

The consumer evaluates the decision and subsequent action and utilizes the acquired experience in making similar decisions in the future.

7. HOW DOES THE CONSUMER MARKET SPEND ITS MONEY?

THE CONSUMER SPENDING PATTERNS


Another important element of marketing information which should be taken into account by the marketing manager, relates to the changing Consumer Spending Patterns

The consumer spending patterns depend upon the Average Income Per Person or Average Income Per Family and are summarized below.

CONSUMER SPENDING AT DIFFERENT INCOME LEVELS 

Expenditure

Income Level

$10,000 -15,000

$20,000 - 30,000

$50,000 And Over

Food 

17.7

15.8

12.6

Housing

24.8

23.0

24.9

Utilities

  8.6

  7.1

  4.7

Clothing

  5.4

  5.8

  5.8

Transportation

17.4

19.1

17.6

Health Care

  7.8

  5.5

  3.7

Entertainment

  3.7

  4.7

  6.1

Tobacco

  1.5

  1.2

  0.5

Contributions 

  2.2

  2.9

  4.3

Insurance/ Pensions

  4.5

  8.2

13.2

Other

  6.3

  6.7

  6.6

© Consumer Expenditure Survey, U.S. Department Of Labor, Bureau Of Labor Statistics, 

8. WHAT IS THE TREND IN THE CONSUMER MARKET AT PRESENT?

TRENDS IN THE CONSUMER MARKET


Marketing managers must realize that the consumer market in the United States undergoes a continuous process of change and adjustment.
Some of the typical changes, or trends, in the Consumer Market are summarized below. (9)

All of these trends play an important role in understanding the consumer market behavior and provide a better insight in the overall marketing management process.

PRESENT TRENDS IN THE CONSUMER MARKET

No.

Details

  1

Changing demographic environment, where the 75 million "baby boomers (born after the Second World War) now account for about one third of the total population.

  2

People marry later in life and have less children.

  3

The number of married couples continues to decline.

  4

Number of working women is increasing dramatically.

  5

About 65 percent of women will be in the labor force by 2005.

  6

47 percent of all households will be non-family or single parent households by the year 2005.

  7

Younger adults move out of their parents home earlier in life.

  8

The divorce rate is increasing.

  9

The percentage of the more educated people is increasing.

10

People are becoming increasingly health conscious.

11

People generally live longer.

9. WHAT IS THE ORGANIZATIONAL MARKET?

THE ORGANIZATIONAL MARKET


The Organizational Market
represents another important consideration for the marketing manager. 

Although the organizational market is much smaller than the consumer market in terms of the number of buyers, it generates the largest aggregate dollar volume of purchases. As mentioned earlier the organizational markets can be classified into two types, as illustrated next.

 TWO TYPES OF ORGANIZATIONAL MARKETS

 Government 
Market

 

 Business 
Market
 

The Business Markets are further classified into two types, as illustrated below.

 TWO TYPES OF BUSINESS MARKETS

 Producers 
Market

 

 Resellers 
Market

The organizational market includes all industrial, commercial, and government organizations, as illustrated below. 

 ELEMENTS OF THE ORGANIZATIONAL MARKET

No.

Details

1

Manufacturers.

2

Service companies.

3

Wholesalers.

4

Retailers.

5

Contractors.

6

Project management companies

7

Farmers.

8

Government organizations.

The organizational market is best characterized by the size of various organizations, as illustrated below.

SIZE DISTRIBUTION OF THE ORGANIZATIONAL MARKET

Type
 Of 
Organization