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Generally PRODUCT means things or physical goods. But its meaning in marketing is massive. In the side of marketing product means goods or services that can satisfy the wants of the consumer. In this context invisible goods may be a product. Such as services of bankers or doctors etc.
According to Philip Kotler, Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, events, persons, places, organization, ideas or mixes of these entities.
From the above discussion we can play our opinion that product is tangible or intangible things that can satisfy the want or need of the consumer.
• Level of Product
To prepare and offer a product, marketer needs to consider five levels of a product. These levels are as follows:
1. Core product or benefit
2. Expected product
3. Expected product
4. Augmented product
5. Potential product
These are summarized in below:
1. Core product or benefit: It is the primary levels to the developement of a product. It is a prime and central part of a product. It is the internal qualities of a product that satisfy the main warmt of a customer. By the answer of what product consumer is buying and what benefit he will get, it is expressed the core product or benefit. It is the main objective for purchasing a product, such as a hotel guest is buying "rest and sleep". The purchases of a drill is buying holes.
2. Expected product: At the second level the marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser and closer.
3. Expected product: At the third level, the marketer prepares an expected product. It is a set of attributes and conditions that buyers normally expect when they purchase this product. Suppose Hotel guest expect a clean bed, fresh towels, working lamps and as relative degree of quiet.
4. Augmented product that exceeds customer expectations. A hotel can inatted a remote control television set, fresh floors, rapid check in, express checkout and fine dining and room service.
5. Potential product: At the fifth level stands the potential product which encompassess all the possible augmentations and transformations the product might go in the future. Here is where companies search for new ways to satisfy customers and distinguish their offers.
Thursday, April 22, 2010
Business Buying Behavior
If we describe the business buyer behavior, them we find four questions. Which are:
a. What buying decision do business buyers make?
b. Who participates in the buying process?
c. What are the major influences on buyers?
d. How do business buyers make their buying decisions?
These questions answer are discussed below:
A. Major types of buying situation: There are three major types of buying situation. These are:
• Straight rebuy: Straight rebuy is a business buying situation in which the buyer routinely recorders something without any modifications.
• Modified rebuy is a buying situation in which the wants to modify product specifications, prices, terms or suppliers.
• New task: New task is a business buying situation in which the buyer purchases a product or service for the first time.
B. Participants in the business buying process: The trillions of Taka worth of goods and services needed by business organization. The decision making unit of a buying organization is calle buying center. The buying center includes all members of the organization who play any of the five role in the purchase decision process. They are discussed below:
• Users: Users are members of the buying organization who will actually use the purchased product or service.
• Influencers: Influencers often help define specifications and also provide information for evaluation alternatives. Naturally, the technical efficient person work as influencers.
• Buyers: Buyers have the formal authority to select the supplier and arrange term of purchase.
• Deciders: Deciders are the people of organization's buying center who have formal or informal power to select or approve the final suppliers.
• Gatekeepers: Gatekeepers are the people in the organization buying center who can control the flow of information to others. These person are technically and the level of secreterial person.
C. Major influence on business buyers: Business buyers are influenced when they make their buying decision. Various groups of influences on business are- environmental, organizational, interpersonal and individual. They are discussed below:
• Environmental factors: Business buyers are influenced by factors in the current and expected economic environment. Such as level of primary demand, the economic outlook and the cost of money.
• Organizational factors: Each buying organization has its own objectives, policies, procedures and system. The business marketer must understand the factors well.
• Interpersonal factors: The buying center usually includes many participants who influence each other. So interpersonal factors also influence the business buying process. However, it is often to difficult to assess such interpersonal factors and groups dynamics.
• Individual factors: Each participant in the business buying-decision process brings in personal motives, perceptions and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality and attitudes toward risk.
D. The business buying process: Business buyers do not buy goods and services for personal consumption. They buy goods and services to make money or to satisfy the customers. There are eight stage in the business buying process. They are discussed below:
• Problem recognition: The first stage of the business buying process in which some one in the company recognizes a problem or need that can be met by acquiring a good or service.
• General need description: The second stage is general need description, the stage ing the business buying process in which the company describes the general characteristics and quality of a needed item.
• Product specification: The next stage is product specification. The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
• Supplier search: After product specification the next stage is suppliers search. The stage of the business buying process in which the buyer tries to find the best vendors.
• Prospoal solicitation: The fifth stage is proposal solicitation. The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.
• Supplier selection: The next stage is supplier selection. The stage of the business process in which the buyer reviews proposals and rejects a supplier or suppliers.
• Order-routine specification: The seventh stage is order-routine specification. The order of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.
• Performance review: The last stage is performance review. The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them.
a. What buying decision do business buyers make?
b. Who participates in the buying process?
c. What are the major influences on buyers?
d. How do business buyers make their buying decisions?
These questions answer are discussed below:
A. Major types of buying situation: There are three major types of buying situation. These are:
• Straight rebuy: Straight rebuy is a business buying situation in which the buyer routinely recorders something without any modifications.
• Modified rebuy is a buying situation in which the wants to modify product specifications, prices, terms or suppliers.
• New task: New task is a business buying situation in which the buyer purchases a product or service for the first time.
B. Participants in the business buying process: The trillions of Taka worth of goods and services needed by business organization. The decision making unit of a buying organization is calle buying center. The buying center includes all members of the organization who play any of the five role in the purchase decision process. They are discussed below:
• Users: Users are members of the buying organization who will actually use the purchased product or service.
• Influencers: Influencers often help define specifications and also provide information for evaluation alternatives. Naturally, the technical efficient person work as influencers.
• Buyers: Buyers have the formal authority to select the supplier and arrange term of purchase.
• Deciders: Deciders are the people of organization's buying center who have formal or informal power to select or approve the final suppliers.
• Gatekeepers: Gatekeepers are the people in the organization buying center who can control the flow of information to others. These person are technically and the level of secreterial person.
C. Major influence on business buyers: Business buyers are influenced when they make their buying decision. Various groups of influences on business are- environmental, organizational, interpersonal and individual. They are discussed below:
• Environmental factors: Business buyers are influenced by factors in the current and expected economic environment. Such as level of primary demand, the economic outlook and the cost of money.
• Organizational factors: Each buying organization has its own objectives, policies, procedures and system. The business marketer must understand the factors well.
• Interpersonal factors: The buying center usually includes many participants who influence each other. So interpersonal factors also influence the business buying process. However, it is often to difficult to assess such interpersonal factors and groups dynamics.
• Individual factors: Each participant in the business buying-decision process brings in personal motives, perceptions and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality and attitudes toward risk.
D. The business buying process: Business buyers do not buy goods and services for personal consumption. They buy goods and services to make money or to satisfy the customers. There are eight stage in the business buying process. They are discussed below:
• Problem recognition: The first stage of the business buying process in which some one in the company recognizes a problem or need that can be met by acquiring a good or service.
• General need description: The second stage is general need description, the stage ing the business buying process in which the company describes the general characteristics and quality of a needed item.
• Product specification: The next stage is product specification. The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
• Supplier search: After product specification the next stage is suppliers search. The stage of the business buying process in which the buyer tries to find the best vendors.
• Prospoal solicitation: The fifth stage is proposal solicitation. The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.
• Supplier selection: The next stage is supplier selection. The stage of the business process in which the buyer reviews proposals and rejects a supplier or suppliers.
• Order-routine specification: The seventh stage is order-routine specification. The order of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.
• Performance review: The last stage is performance review. The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them.
Characteristics of Business Market
Business market is formed by individual market, resale market and government. In large business market every businessman sell their produced goods to the other businessmen. The goods are provided to the ultimate consumer through dealer, wholesaler, retailer etc. The characteristics of business market are discussed below:
• MARKET STRUCTURE AND DEMAND: In business market, marketers are few but transaction is large amount. The characteristics which under market structure and demand are discussed below:
• Fewer but larger buyer: In business market, the buyers are few but the amount of purchase is large. Industrial organizations are needed to large amount of goods for large production.
• Geographically concentrated: Business market is concentrated geographically, that means business market in established in a certain area.
• Derived Demand: Derived demand is created from the final consumer demand. If the need of consumable goods increase or decrease then the industrial market increase or decrease.
• Inelastic demand: Demand of many business market is more inelastic. The demand is not affect as much as short run by price changes.
• Fluctuating demand: Demand in business markets fluctuates more and more quickly. If the need of consumable goods little increase then the need of industrial goods more increase.
NATURE OF BUYING UNIT: Business purchase is more complex that consumer purchase and the buyer have more professional effort. Sometimes this purchase is implemented by appointing trained up purchase agent.
TYPES OF DECISION AND THE DECISION PROCESS: Business marketer have to face more complex buying decision than the consumer marketer. Because a large amount of money is transacted for purchasing goods, which consider the monetary matter. In this buying process many people of the organization are engaged. Business buyer takes more time to take buying decision for complexity.
Above these are the characteristics of business.
• MARKET STRUCTURE AND DEMAND: In business market, marketers are few but transaction is large amount. The characteristics which under market structure and demand are discussed below:
• Fewer but larger buyer: In business market, the buyers are few but the amount of purchase is large. Industrial organizations are needed to large amount of goods for large production.
• Geographically concentrated: Business market is concentrated geographically, that means business market in established in a certain area.
• Derived Demand: Derived demand is created from the final consumer demand. If the need of consumable goods increase or decrease then the industrial market increase or decrease.
• Inelastic demand: Demand of many business market is more inelastic. The demand is not affect as much as short run by price changes.
• Fluctuating demand: Demand in business markets fluctuates more and more quickly. If the need of consumable goods little increase then the need of industrial goods more increase.
NATURE OF BUYING UNIT: Business purchase is more complex that consumer purchase and the buyer have more professional effort. Sometimes this purchase is implemented by appointing trained up purchase agent.
TYPES OF DECISION AND THE DECISION PROCESS: Business marketer have to face more complex buying decision than the consumer marketer. Because a large amount of money is transacted for purchasing goods, which consider the monetary matter. In this buying process many people of the organization are engaged. Business buyer takes more time to take buying decision for complexity.
Above these are the characteristics of business.
Business, Institutional & Govt. Markets
• BUSINESS MARKET: The business buyer is needed to process the industrial goods and to reach consumpable goods to the consumer, which market is formed by business buyer is called business market. In business market a large amount of goods are sold than consumer market.
According to Webstar and Wind, "The business market consists of all the business that buy goods and services to use in the production of other products and services that are sold, rented or supplied to others.
According it Steven J. Skinner, "A business market is a market that includes individuals or groups that purchase a specific kind of product for resale, direct use in the production of other products or use in general daily operations."
• Institutional Market: The institutional market consists of schools, hospitals, nursing homes, prisons and other institutions that must provide goods and services to people in their care. Many of these organization are characterized by low budgets and disable persons.
• The Government Market: The government market consists of governmment units federal state and local that purchase or sent goods for carrying out the main functions of government. Government buying is based on acquiring products and services that the voters and their representatives establish as necessary to carry out public objectives. Government agencies buy an amazing range of products and services. They buy sculpture, chalkboards, furniture, toileteries, clothing materials-handling equipment, fire engines, mobile equipmen and fuel.
According to Webstar and Wind, "The business market consists of all the business that buy goods and services to use in the production of other products and services that are sold, rented or supplied to others.
According it Steven J. Skinner, "A business market is a market that includes individuals or groups that purchase a specific kind of product for resale, direct use in the production of other products or use in general daily operations."
• Institutional Market: The institutional market consists of schools, hospitals, nursing homes, prisons and other institutions that must provide goods and services to people in their care. Many of these organization are characterized by low budgets and disable persons.
• The Government Market: The government market consists of governmment units federal state and local that purchase or sent goods for carrying out the main functions of government. Government buying is based on acquiring products and services that the voters and their representatives establish as necessary to carry out public objectives. Government agencies buy an amazing range of products and services. They buy sculpture, chalkboards, furniture, toileteries, clothing materials-handling equipment, fire engines, mobile equipmen and fuel.
Buyer Decision Process for New Product
Before going to the buyer decision we have to know what is new product. New product is a good, service or idea that is perceived by some potential customer as new.
Now we discuss the buyer decision process for new products.
STAGE IN THE ADOPTION PROCESS: Adoption process is the mental process through which an individual passes first hearing about an innovation to final adoption. Consumers go through five stages in the process of adopting a new product. These are-
• Awareness: The consumer becomes aware of information about it.
• Interest: The consumer considers whether trying the new products make sense.
• Evaluation: The consumer considers whether trying the new product make sense.
• Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value.
• Adoption: The consumer decide to make full and regular use of the new product.
INDIVIDUAL DIFFERENCES IN INNOVATIVENESS: People differ greatly in their readiness to try new products. People can be classified into five adopter categories. They are discussed below.
• Innovators: Innovators are venture some. They try new products at some risk.
• Early Adopters: Early adopters are guided by respect. They are opinion leaders in their communities and adopt new product early but carefully.
• Early Majority: Early majority are deliberates. Although they are rarely leaders. They adopt new product before the average person.
• Late Majority: Late majority are skeptical. They adopt an innovation only after a majority of people have tried it.
• Laggards: Laggards are tradition bound. They suspicious only when it has become something of a tradition itself.
INFLUENCE OF PRODUCT CHARACTERISTICS ON RATE OF ADOPTION: The characteristics of the new product affect its rate of adoption. Some produc bathbi on overnight, whereas others take a long time to gain acceptance. Five characteristics are important in influencing an innovation's rate of adoption. They are discussed below:
• Relative Advantage: Relative advantage is the degree to which the innovation appears superior to existing products.
• Compatibility: Compatibility is the degree to which the innovation fits the values and experiences of potential consumers.
• Complexity: Complexity is the degree to which the innovation is difficult to understand or use.
• Divisibility: Divisiblity is the degree to which the innovation may be tried on a limited basis.
• Communicability: Communicability is the degree to which the result of using the innovation can be observed or described to others.
• The new product marketer has to research all these factors when developing the new product and its marketing program.
Now we discuss the buyer decision process for new products.
STAGE IN THE ADOPTION PROCESS: Adoption process is the mental process through which an individual passes first hearing about an innovation to final adoption. Consumers go through five stages in the process of adopting a new product. These are-
• Awareness: The consumer becomes aware of information about it.
• Interest: The consumer considers whether trying the new products make sense.
• Evaluation: The consumer considers whether trying the new product make sense.
• Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value.
• Adoption: The consumer decide to make full and regular use of the new product.
INDIVIDUAL DIFFERENCES IN INNOVATIVENESS: People differ greatly in their readiness to try new products. People can be classified into five adopter categories. They are discussed below.
• Innovators: Innovators are venture some. They try new products at some risk.
• Early Adopters: Early adopters are guided by respect. They are opinion leaders in their communities and adopt new product early but carefully.
• Early Majority: Early majority are deliberates. Although they are rarely leaders. They adopt new product before the average person.
• Late Majority: Late majority are skeptical. They adopt an innovation only after a majority of people have tried it.
• Laggards: Laggards are tradition bound. They suspicious only when it has become something of a tradition itself.
INFLUENCE OF PRODUCT CHARACTERISTICS ON RATE OF ADOPTION: The characteristics of the new product affect its rate of adoption. Some produc bathbi on overnight, whereas others take a long time to gain acceptance. Five characteristics are important in influencing an innovation's rate of adoption. They are discussed below:
• Relative Advantage: Relative advantage is the degree to which the innovation appears superior to existing products.
• Compatibility: Compatibility is the degree to which the innovation fits the values and experiences of potential consumers.
• Complexity: Complexity is the degree to which the innovation is difficult to understand or use.
• Divisibility: Divisiblity is the degree to which the innovation may be tried on a limited basis.
• Communicability: Communicability is the degree to which the result of using the innovation can be observed or described to others.
• The new product marketer has to research all these factors when developing the new product and its marketing program.
The Buyer Decision Process
The consumer passes through five stages: Problem recognition, information search, evaluation of alternatives, purchase decision, post purchase behavior. We can show the buying decision process though the following model.
>Problem Recognition
>Information Search
>Evaluation of Alternatives
>Purchase Decision
>Post Purchase Behavior
Now these stages are described below:
• Problem Recognition: The first stage of the buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.
• Information Search: The second stage of the buyer decision process in which the consumer is aroused to search for more information, the consumer may simply have heightened attention or may go into active information search.
• Evaluation of Alternatives: The third stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set.
• Purchase Decision: The fourth stage of the buyer decision process in which the consumer actually buys the product.
• Post Purchase Behavior: The last stage of the buyer decision process in which consumers take further action after purchase based no their satisfaction or dissatisfaction.
>Problem Recognition
>Information Search
>Evaluation of Alternatives
>Purchase Decision
>Post Purchase Behavior
Now these stages are described below:
• Problem Recognition: The first stage of the buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service.
• Information Search: The second stage of the buyer decision process in which the consumer is aroused to search for more information, the consumer may simply have heightened attention or may go into active information search.
• Evaluation of Alternatives: The third stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set.
• Purchase Decision: The fourth stage of the buyer decision process in which the consumer actually buys the product.
• Post Purchase Behavior: The last stage of the buyer decision process in which consumers take further action after purchase based no their satisfaction or dissatisfaction.
Types of buying decision behavior
Buying decision behavior is divited into four types. They are discussed in below:
• Complex buying behavior: Complex buying behavior is consumer buying behavior in situations characterized by high involvement but few differences among brands.
• Dissonance-reducing behavior: Dissonance-reducing buying behavior is consumer buying behavior in situations characterised by high involvement but few perceived differences among brands.
• Habitual buying behavior: Habitual buying behavior is consumer buying behavior in situation characterized by low consumer involvement and few significant perceived differences.
• Variety-seeking buying behavior: Variety seeking buying behavior is consumer buying behavior in situation characterized by low consumer involvement but significant perceived differences.
• Complex buying behavior: Complex buying behavior is consumer buying behavior in situations characterized by high involvement but few differences among brands.
• Dissonance-reducing behavior: Dissonance-reducing buying behavior is consumer buying behavior in situations characterised by high involvement but few perceived differences among brands.
• Habitual buying behavior: Habitual buying behavior is consumer buying behavior in situation characterized by low consumer involvement and few significant perceived differences.
• Variety-seeking buying behavior: Variety seeking buying behavior is consumer buying behavior in situation characterized by low consumer involvement but significant perceived differences.
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