1. Business markets
Marketing in businesses is different to marketing to consumers, although many of the techniques, such as branding,
can be transferred successfully.
In particular, business-to-business markets (B2B) are more focused oncustomer relationships than is normally true for
consumer markets.
Business vs consumer markets
To help explain the differences between business and consumer markets, It is worth drawing some comparisons
between the two.
Consumer Business
Every customer has equal value and represents a There are a small number of big customers that
small % of revenue account for a large % of revenue
Sales are made remotely, the manufacturer doesn't Sales are made personally, the manufacturer gets to
meet the customer know the customer
Products are the same for all customers. The service Products are customised for different customers.
element is low Service is highly valued
Purchases are made for personal use - image is Purchases are made for others to use - image is
important for its own sake important where it adds value to customers
The purchaser is normally the user The purchaser is normally an integrator, someone
down the supply chain is the user.
Costs are restricted to purchase costs Purchase costs may be a small part of the total costs
of use
The purchase event is not subject to tender and The purchase event is conducted professionally and
negotiation includes tender and negotiation.
The exchange is one off transaction. There is no The exchange is often one of strategic intent. There
long-time view (financial services differ) is the potential for long term value
For both consumer and B2B markets, the foundation of marketing is based on knowing your customers. However, in
consumer markets, the customer is remote, at arms length from you, and consequently you use mass communication
and distribution tools.
In B2B the customer is much closer. You have far more knowledge of the customer through personal contacts,
although this knowledge is typically ad hoc in nature and may be partial.For a consumer market, the product and its
packaging are of greatest importance to the customer in the marketing mix.

2. For B2B markets, although product quality is important, this has to be matched by quality of supply - delivering the
product when it is needed, account service and support, and strategic flexibility within the relationship context.
These supply chain elements may have more say in winning order than having a perfect product. This is not
surprising as any supply chain problems create costs for the customer (eg stock, machine downtime, lost orders)
Because supply chain is often seen as logistical function in B2B markets, the role of marketing is limited to a role of
creating promotional materials, attending exhibitions and running seminars. In these circumstances marketing may
have no strategic role in the business and be operating purely as a printing and publishing outfit.
Ideally marketing needs to be heavily involved with the customer and in fact marketing in a B2B context is often
referred to as delivering not just for your customer, but for your customer's customer. By taking a whole chain
view, it can be possible to identify downstream opportunities for additional revenue and opportunities to
use branding to stake out your position in the value chain.
Consumer behaviour
Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It
blends elements from psychology,sociology, social anthropology and economics. It attempts to
understand the buyer decision making process, both individually and in groups. It studies characteristics
of individual consumers such as demographics and behavioural variables in an attempt to understand
people's wants. It also tries to assess influences on the consumer from groups such as family, friends,
reference groups, and society in general.
Black box model
ENVIRONMENTAL FACTORS BUYER'S BLACK BOX
BUYER'S
RESPONSE
Marketing Environmental Buyer
Decision Process
Stimuli Stimuli Characteristics
Problem recognition
Economic Attitudes
Information search Product choice
Product Technological Motivation
Alternative Brand choice
Price Political Perceptions
evaluation Dealer choice
Place Cultural Personality
Purchase decision Purchase timing
Promotion Demographic Lifestyle
Post-purchase Purchase amount
Natural Knowledge
behaviour
The black box model shows the interaction of stimuli, consumer characteristics, decision process and
[1]
consumer responses. It can be distinguished between interpersonal stimuli(between people) or
[2]
intrapersonal stimuli (within people). The black box model is related to the black box
theory of behaviourism, where the focus is not set on the processes inside a consumer, but

3. the relation between the stimuli and the response of the consumer. The marketing stimuli are planned
and processed by the companies, whereas the environmental stimulus are given by social factors, based
on the economical, political and cultural circumstances of a society. The buyers black box contains the
buyer characteristics and the decision process, which determines the buyers response.
The black box model considers the buyers response as a result of a conscious, rational decision process,
in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are
not made in awareness of a determined problem by the consumer.
Information search
Once the consumer has recognised a problem, they search for information on products and services that
can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal
(memory) and an external search.
Sources of information include:
 Personal sources
 Commercial sources
 Public sources
 Personal experience
The relevant internal psychological process that is associated with information search is perception.
Perception is defined as "the process by which an individual receives, selects, organises, and interprets
information to create a meaningful picture of the world".
The selective perception process
Stage Description
 Selective exposure consumers select which promotional messages they will expose themselves to.
 Selective attention consumers select which promotional messages they will pay attention to.
 Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives
and experiences.
 Selective retention consumers remember messages that are more meaningful or important to them.
The implications of this process help develop an effective promotional strategy, and select which sources
of information are more effective for the brand.
Information evaluation
At this time the consumer compares the brands and products that are in their evoked set. How can the
marketing organization increase the likelihood that their brand is part of the consumer's evoked
(consideration) set? Consumers evaluate alternatives in terms of the functional and psychological
benefits that they offer. The marketing organization needs to understand what benefits consumers are
seeking and therefore which attributes are most important in terms of making a decision. It also needs to
check other brands of the customer’s consideration set to prepare the right plan for its own brand.
Purchase decision

4. Once the alternatives have been evaluated, the consumer is ready to make a purchase decision.
Sometimes purchase intention does not result in an actual purchase. The marketing organization must
facilitate the consumer to act on their purchase intention. The organization can use a variety of
techniques to achieve this. The provision of credit or payment terms may encourage purchase, or a sales
promotion such as the opportunity to receive a premium or enter a competition may provide an incentive
to buy now. The relevant internal psychological process that is associated with purchase decision is
integration. Once the integration is achieved, the organization can influence the purchase decisions much
more easily.
Postpurchase evaluation
The EKB model was further developed by Rice (1993) which suggested there should be a feedback loop,
Foxall (2005) further suggests the importance of the post purchase evaluation and that the post purchase
evaluation is key due to its influences on future purchase patterns.
Internal influences
Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality, motivation,
knowledge, attitudes, beliefs, and feelings.
External influences
Consumer behaviour is influenced by: culture, sub-culture, locality, royalty, ethnicity, family, social class,
past experience reference groups, lifestyle, market mix factors
Defining Consumer Behavior
What is Consumer Behavior?
How many times throughout the day do people make product decisions? If you stop to think about it, many
product decisions are made every day, some without much thought. What should I wear? What should I eat? What
am I going to do today? Many product decisions are answered routinely every day and they help move the
economy of cities, countries and ultimately the world.
Product decisions also shape life for the consumer. How can simple decisions be so important? Why do marketers
spend millions of dollars to uncover the reasons behind these decisions?
To define consumer behavior: it is the study of consumers and the processes they use to choose, use (consume),
and dispose of products and services. A more in depth definition will also include how that process impacts the
world. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and
economics.
"All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and
Mothersbaugh, 2007). Researching consumer behavior is a complex process, but understanding consumer
behavior is critical to marketers-they can use it to:
Provide value and customer satisfaction.
Effectively target customers.
Enhance the value of the company.

5. Improve products and services.
Create a competitive advantage
Understand how customers view their products versus their competitors' products.
Expand the knowledge base in the field of marketing,
Apply marketing strategies toward a positive affect on society (encourage people to support charities, promote
healthy habits, reduce drug use etc.)
Consumers As Problem Solvers
Traditionally, consumer researchers have approached decision making process from a rational
perspective. This dominant school of thought views consumers as being cognitive (i.e., problem-
solving) and, to some but a lesser degree, emotional.i Such a view is reflected in the stage model
of a typical buying process (often called the consumer information processing model) depicted in
Figure 1.
Problem Recognition
Information Search
Evaluation and Selection of Alternatives
Decision Implementation
Post-purchase Evaluation
Figure 1 The Consumer Information Processing Model
Source: Adopted from Kotler (1997), Schiffman and Kanuk (1997), and Solomon (1996)
In this model, the consumer passes through five stages: problem recognition, information search,
evaluation and selection of alternatives, decision implementation, and post-purchase evaluation.
Problem Recognition
In this information processing model, the consumer buying process begins when the buyer
recognizes a problem or need. For example, Doug may realize that his best suit doesn’t look
contemporary any more. Or, Kathleen may recognize that her personal computer is not
performing as well as she thought it should. These are the kinds of problem that we as
consumers encounter all the time. When we found out a difference between the actual state and

6. a desired state, a problem is recognized. When we find a problem, we usually try to solve the
problem. We, in other words, recognize the need to solve the problem. But how?
Information Search
When a consumer discovers a problem, he/she is likely to search for more information. Kathleen
may simply pay more attention to product information of a personal computer. She becomes
more attentive to computer ads, computers purchased by her friends, and peer conversations
about computers. Or, she may more actively seek information by visiting stores, talking to
friends, or reading computer magazines, among others. Through gathering information, the
consumer learns more about some brands that compete in the market and their features and
characteristics. Theoretically, there is a total set of brands available to Kathleen, but she will
become aware of only a subset of the brands (awareness set) in the market. Some of these
brands may satisfy her initial buying criteria, such as price and processing speed (consideration
set). As Kathleen proceeds to more information search, only a few will remain as strong
candidates (choice set).
Evaluation and Selection of Alternatives
How does the consumer process competitive brand information and evaluate the value of the
brands? Unfortunately there is no single, simple evaluation process applied by all consumers or
by one consumer in all buying situations.
Decision Implementation
To actually implement the purchase decision, however, a consumer needs to select both specific
items (brands) and specific outlets (where to buy) to resolve the problems. There are, in fact,
three ways these decisions can be made: 1) simultaneously; 2) item first, outlet second; or 3)
outlet first, item second.ii In many situations, consumers engage in a simultaneous selection
process of storesiii and brands. For example, in our Kathleen’s personal computer case, she may
select a set of brands based on both the product’s technical features (attributes) and availability
of brands in the computer stores and mail-order catalogs she knows well. It is also possible, that
she decides where to buy (e.g., CompUSA in her neighborhood) and then chooses one or two
brands the store carries. Once the brand and outlet have been decided, the consumer moves on to
the transaction (“buying”).
Post-purchase Evaluation
Post-purchase evaluation processes are directly influenced by the type of preceding decision-
making process. Directly relevant here is the level of purchase involvement of the consumer.
Purchase involvement is often referred to as “the level of concern for or interest in the purchase”
iv
situation, and it determines how extensively the consumer searches information in making a
purchase decision.v Although purchase involvement is viewed as a continuum (from low to
high), it is useful to consider two extreme cases here. Suppose one buys a certain brand of
product (e.g., Diet Pepsi) as a matter of habit (habitual purchase). For him/her, buying a cola
drink is a very low purchase involvement situation, and he/she is not likely to search and
evaluate product information extensively. In such a case, the consumer would simply purchase,
consume and/or dispose of the product with very limited post-purchase evaluation, and generally
maintain a high level of repeat purchase motivation (Figure 3).
Simple Repeat Purchase
Purchase Product Use Disposition
Evaluation Motivation
Low Involvement Purchase

7. However, if the purchase involvement is high and the consumer is involved in extensive
purchase decision making (e.g., personal computer), he/she is more likely to be involved in more
elaborate post-purchase evaluation – often by questioning the rightness of the decision: “Did I
make the right choice? Should I have gone with other brand?” This is a common reaction after
making a difficult, complex, relatively permanent decision. This type of doubt and anxiety is
referred to as post-purchase cognitive dissonance (Figure 4).
Post-purchase
Dissonance Dissatisfaction
Elaborate Repeat Purchase
Purchase Product Use Disposition
Evaluation Motivation
Figure 4 Elaborate Post-purchase Evaluation
Source: Adopted from Hawkins, Best, and Coney (1983)
According to the research, the likelihood of experiencing this kind of dissonance and the
magnitude of it is a function of:vi
The degree of commitment or irrevocability of the decision,
The importance of the decision to the consumer,
The difficulty of choosing among the alternatives, and
The individual’s tendency to experience anxiety.
Because dissonance is uncomfortable, the consumer may use one or more of the following
approaches to reduce it:vii
Increase the desirability of the brand purchased.
Decrease the desirability of rejected alternatives.
Decrease the importance of the purchase decision.
Reject the negative data on the brand purchased.
If the dissonance about the purchase is not reduced, the anxiety may transform into a
dissatisfaction (general or specific). Certainly, this negative experience leads to a new problem
recognition (Figure 1), and the consumer will engage in another problem solving process. The
difference, however, is that in the next round of process, memory of the previous negative
experience and dissatisfaction will be used as part of information. Therefore, the probability for
the unsatisfactory brand to be re-selected and repurchased will be significantly lower than before.
The Hierarchy of Effects
Another widely-used model in marketing that attempts to explain consumer decision making
process is called the hierarchy of effects model. Although different researchers developed
slightly different models, the basic idea is the same: people experience a sequence of
psychological stages before purchasing a product. Such a model is provided in Figure 5. viii

8. Purchase
Conviction
Preference
Liking
Knowledge
Awareness
Unawareness
Figure 5 A General Model of the Hierarchy of Effects
Originally conceived to explain how advertising affects consumer’s purchase decisions, the
hierarchy of effects (HOE) model focuses on consumer learning that takes place as he/she
processes information from the external world. The HOE model begins with the state where a
consumer has no awareness about the brand (unaware) then develops awareness triggered by
external stimuli, such as advertising message or “word of mouth.” As he/she obtains and
processes more information, the consumer develops more specific knowledge about the brand.
The knowledge, then, is used as basis to form a liking (or disliking), leading to a preference of
brand(s) relative to the others. However, people need to be pushed beyond the preference stage
to actually buy the brand of preference. The preference stage, after all, simply means that the
consumer has formed a preference psychologically. Now it takes conviction for him/her before
actually buying the brand.
The HOE model is quite similar to the consumer information processing model because it also
assumes that people are cognitively driven, thinking information processors. Controversy
exists,ix of course, as to whether that is necessarily true. Some may claim that they often form
liking and preference (emotional response or feeling) toward brands before developing cognitive
judgment (knowledge or thinking) on them. Others argue that people form preference and
knowledge simultaneously. Although each argument has its own support, the general model
(cognition first, preference second) seems to be valid especially in relatively complex – or high-
involvement – decision making situations (e.g., cars, computers), providing a conceptual
framework for thinking about the sequence of events which begins from the initial awareness to
the final action (i.e., purchasing).
Buyer behaviour - The decision-making process

9. This model is important for anyone making marketing decisions. It forces the marketer to consider the
whole buying process rather than just the purchase decision (when it may be too late for a business to
influence the choice!)
The model implies that customers pass through all stages in every purchase. However, in more routine
purchases, customers often skip or reverse some of the stages.
For example, a student buying a favourite hamburger would recognise the need (hunger) and go right
to the purchase decision, skipping information search and evaluation. However, the model is very
useful when it comes to understanding any purchase that requires some thought and deliberation.
The buying process starts with need recognition. At this stage, the buyer recognises a problem or need
(e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g.
you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins).
An “aroused” customer then needs to decide how much information (if any) is required. If the need is
strong and there is a product or service that meets the need close to hand, then a purchase decision is
likely to be made there and then. If not, then the process of information search begins.
A customer can obtain information from several sources:
• Personal sources: family, friends, neighbours etc
• Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays
• Public sources: newspapers, radio, television, consumer organisations; specialist magazines
• Experiential sources: handling, examining, using the product

10. The usefulness and influence of these sources of information will vary by product and by customer.
Research suggests that customers value and respect personal sources more than commercial sources
(the influence of “word of mouth”). The challenge for the marketing team is to identify which
information sources are most influential in their target markets.
In the evaluation stage, the customer must choose between the alternative brands, products and
services.
How does the customer use the information obtained?
An important determinant of the extent of evaluation is whether the customer feels “involved” in the
product. By involvement, we mean the degree of perceived relevance and personal importance that
accompanies the choice.
Where a purchase is “highly involving”, the customer is likely to carry out extensive evaluation.
High-involvement purchases include those involving high expenditure or personal risk – for example
buying a house, a car or making investments.
Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the
supermarket) have very simple evaluation processes.
Why should a marketer need to understand the customer evaluation process?
The answer lies in the kind of information that the marketing team needs to provide customers in
different buying situations.
In high-involvement decisions, the marketer needs to provide a good deal of information about the
positive consequences of buying. The sales force may need to stress the important attributes of the
product, the advantages compared with the competition; and maybe even encourage “trial” or
“sampling” of the product in the hope of securing the sale.
Post-purchase evaluation - Cognitive Dissonance
The final stage is the post-purchase evaluation of the decision. It is common for customers to
experience concerns after making a purchase decision. This arises from a concept that is known as
“cognitive dissonance”. The customer, having bought a product, may feel that an alternative would
have been preferable. In these circumstances that customer will not repurchase immediately, but is
likely to switch brands next time.
To manage the post-purchase stage, it is the job of the marketing team to persuade the potential
customer that the product will satisfy his or her needs. Then after having made a purchase, the
customer should be encouraged that he or she has made the right decision.
The main factors that influence buying behaviour are as follows
1.Economic factors:
Price

11. Income
Distribution of income
Competition with substitutes
Utility
Consumer preferences
2.Social factors:
Culture
Attitude of society
Social values
Life style
Personality
Size of family
Education
Health standards
3.Psychology
It decides the personality, taste, attitudes of individuals or groups, lifestyle, preferences especially on
occasions like marriage. The demonstration influence is also dependent upon psychology of an individual.
4.Anthropology and Geography
Climate, region, history all affect consumer behaviour. In hot countries like India, certain products, which
keep us cool like squashes, sarbats, are demanded, but they certainly have no demand in cold regions. The
dress is also influenced by climate along with other factors. Culture is also influenced by climate.
5.Technology
In case of equipments, whether for consumer use or industrial use, is affected by technological
innovations and features. But it is not confined to durable goods only.
Even in case of perishable goods the shelf life etc are determined by technological developments.
Innovations and introduction of new products also depend upon technological change.
6.Situational influences
Purchase task - who are you buying for?

12. Social surroundings - who are you shopping with?
Physical surroundings - where are you shopping?
Temporal factors - how much time do you have to shop?
Antecedent states -
What kind of mood are you in?
Have you just been paid?
Do you shop for status or self-gratification?
7.Others
This includes knowledge – technical or otherwise and information.
Government decisions, laws, distribution policies have also big effect on consumer behaviour.
All these factors are studied by consumer behaviour scientists and then they decide what production and
marketing strategy should be adopted to develop a particular product, change the existing product and
what pricing and marketing mix should be used to attract more customers towards the product or service
to optimize sales and profits.
MNC’s and few big companies have ignored except the consumer behaviour study in India. It is because
till recently say upto the beginning of 90’s there was sellers market and anything could be sold. Therefore
hardly any attention was paid to the consumer.
Major Types of Buying Situations
1. New Task
A business buying situation in which the buyer purchases a product or service for the first time.
2. Modified Rebuy
A business buying situation in which the buyer wants to modify product specifications, prices, terms, or
suppliers.
3. Straight Rebuy
A business buying situation in which the buyer routinely reorders something without any modifications.