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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
Local Buyer Behavior
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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.
Local Buyer Behavior
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Problemrecognition
Search
Evaluation
of
alternativesChoice Outcomes
The Buyer Decision Process
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The Buyer Decision Process
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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The Buyer Decision Process
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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The Buyer Decision Process
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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The Buyer Decision Process
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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The Buyer Decision Process
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
Local Market Research
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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.
Local Market Research
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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.
Local Market Research
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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.
Local Market Research
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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.
Local Market Research
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).
Local Market Research
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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
Local Market Research
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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