Business Buyer Behaviour

We were talking about Business-to-consumer (B2C, sometimes also called Business-to-Customer), so far. But recently we have started something quite different and contrasting- Business-to-business (B2B). It describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.

Some people think marketing is marketing and whether you are marketing to consumers or marketing to businesses, you are still just marketing to people. But it is not the truth. Business-to-business (B2B) and business-to-consumer (B2C) marketing is different.

The volume of B2B transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving subcomponent or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windshields, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

Main differences:

B2C
•Product driven
•Maximize the value of the transaction
•Large target market
•Single step buying process, shorter sales cycle
•Brand identity created through repetition and imagery
•Merchandising and point of purchase activities
•Emotional buying decision based on status, desire, or price

B2B
•Relationship driven
•Maximize the value of the relationship
•Small, focused target market
•Multi-step buying process, longer sales cycle
•Brand identity created on personal relationship
•Educational and awareness building activities
•Rational buying decision based on business value


More about this topic you will find here:
http://vista-consulting.com/marketing-b2b-vs-b2c/

We were talking about types of organisations:

Government organisations
• Health
• Environmental protection
• Education
• Policing
• Transport
• National defence and security

Institutional organisations
• Not-for-profit
• Community-based organisations

Commercial organisations
• Distributors
• Original equipment manufacturers
• Users
• Retailers

Later, we were working in groups through the task sheet giving our best guesses to answer the questions. We had to consider three organisations:

1. Coca Cola
2. A Financial Services software house
3. An MRI Scanner manufacturer

For example, we agreed that Coca-Cola's customers are distributors and retailers. Financial Services Software supply companies (e.g banks) and MRI Scanner Manufacturer's customers are mainly hospitals and the private sector.

The number of potential customers and order value differs in each case:
• Coca Cola (UK) 50 million / £1-£5
• Financial Services software – 100s – all banks, building societies, mortgage lenders, loan companies / £50, 000
• MRI scanner manufacturer – 1 The NHS (possibly private hospital group) / £825, 000

We considered FTPEPS for these organizations as well:
Coke:
F – none
T - none (impulse)
P - none
E – none
P – none
S - none

FS Software:
F – high
T - high
P - high
E – High
P – Low
S - Low

MRI Scanner Manufacturer:
F - £825,000 of restricted budgets
T – possibly years
P – if it malfunctions it could kill by misdiagnosis
E – high risk for postholder
P – it could kill
S – local community may have helped to raise funds – many interested publics

In B2B Close-Supplier Relationship is very important. There are fewer clients, more money - more risk.

The better a business can manage the relationships it has with its customers the more successful it will become. It is called Customer relationship management.

CRM is not just the application of technology, but is a strategy to learn more about customers' needs and behaviours in order to develop stronger relationships with them.

CRM includes many aspects which relate directly to one another:
•Front office operations — Direct interaction with customers, e.g. face to face meetings, phone calls, e-mail, online services etc.
•Back office operations — Operations that ultimately affect the activities of the front office (e.g., billing, maintenance, planning, marketing, advertising, finance, manufacturing, etc.)
•Business relationships — Interaction with other companies and partners, such as suppliers/vendors and retail outlets/distributors, industry networks (lobbying groups, trade associations). This external network supports front and back office activities.
•Analysis — Key CRM data can be analyzed in order to plan target-marketing campaigns, conceive business strategies, and judge the success of CRM activities (e.g., market share, number and types of customers, revenue, profitability).


We were talking also about Derived Demand. According to Investopedia it is a term used in economic analysis that describes the demand placed on one good or service as a result of changes in the price for some other related good or service. It is a demand for some physical or intangible thing where a market exists for both related goods and services in question. The derived demand can have a significant impact on the derived good's market price.

Tickets are a derived demand for entertainment. Entertainment is the demand being satisfied when a ticket is bought; it is purely a means to an end. The ticket is not an end in itself. The ticket is merely a license to attend a specified event at a specified time and place. The ticket agency is merely that, an agent of the principal (the event owner) authorized to make a transaction with a prospective attendee on the behalf of the principle.

Factors Affecting Demand Elasticity:
•The availability of substitutes
•Amount of income available to spend on the good
•Time

The next important thing which Ruth asked us was how many people are involved in a purchase of a can of coke, a software system for a bank and MRI scanner. In order to buy coke there is a need of one person but the purchase of MRI scanner is much more complex and it involves a lot of people.

We were talking about three important terms as well:

•Direct purchasing - Investors making direct purchases deal directly with the fund company over the phone, in person at investor centers, or by mail.
•Reciprocity - Products not always bought for cash, they can be exchanged between the two companies.
•Leasing - A contract granting use or occupation of property during a specified period in exchange for a specified rent.

More about B2B and B2C you will find in this article:
http://www.bizjournals.com/denver/stories/2006/04/03/focus2.html

Culture

Culture refers to the cumulative deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving.
Culture is the systems of knowledge shared by a relatively large group of people.

Culture is communication, communication is culture.

More definitions you will find here: http://www.tamu.edu/classes/cosc/choudhury/culture.html




The word "culture" is most commonly used in three basic senses:
•excellence of taste in the fine arts and humanities
•an integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for symbolic thought and social learning
•the set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group.

According to Wikipedia, cultures are externally affected via contact between societies, which may also produce - or inhibit - social shifts and changes in cultural practices. War or competition over resources may impact technological development or social dynamics. Additionally, cultural ideas may transfer from one society to another, through diffusion or acculturation. In diffusion, the form of something (though not necessarily its meaning) moves from one culture to another. For example, hamburgers, mundane in the United States, seemed exotic when introduced into China.

Cultural differences manifest themselves in different ways and differing levels of depth. Symbols represent the most superficial and values the deepest manifestations of culture, with heroes and rituals in between.
•Symbols are words, gestures, pictures, or objects that carry a particular meaning which is only recognized by those who share a particular culture.
•Heroes are persons, past or present, real or fictitious, who possess characteristics that are highly prized in a culture. They also serve as models for behaviour.
•Rituals are collective activities, sometimes superfluous in reaching desired objectives, but are considered as socially essential. They are therefore carried out most of the times for their own sake (ways of greetings, paying respect to others, religious and social ceremonies, etc.).
•The core of a culture is formed by values. They are broad tendencies for preferences of certain state of affairs to others (good-evil, right-wrong, natural-unnatural). Many values remain unconscious to those who hold them. Therefore they often cannot be discussed, nor they can be directly observed by others. Values can only be inferred from the way people act under different circumstances.
•Symbols, heroes, and rituals are the tangible or visual aspects of the practices of a culture. The true cultural meaning of the practices is intangible; this is revealed only when the practices are interpreted by the insiders.

Manifestation of Culture at Different Levels of Depth:

A variable can be operationalized either by single- or composite-measure techniques. A single-measure technique means the use of one indicator to measure the domain of a concept; the composite-measure technique means the use of several indicators to construct an index for the concept after the domain of the concept has been empirically sampled.

Hofstede (1997) has devised a composite-measure technique to measure cultural
differences among different societies:
•Power distance index: The index measures the degree of inequality that exists in a society.
•Uncertainty avoidance index: The index measures the extent to which a society feels threatened by uncertain or ambiguous situations.
•Individualism index: The index measure the extent to which a society is individualistic.
•Masculinity index (Achievement vs. Relationship): The index measures the extent to which the dominant values are assertiveness, money and things (achievement), not caring for others or for quality of life. The other end of the spectrum would be femininity (relationship).




Cultural norms are behavior patterns that are typical of specific groups. Such behaviors are learned from parents, teachers, peers, and many others whose values, attitudes, beliefs, and behaviors take place in the context of their own organizational culture.

This table shows the comparison of cultural norms and values:
http://www.augsburg.edu/education/edc210/norms-values.html


It is interesting to see how different countries celebrate Christmas.



For Americans it is Santa and his reindeer, hot chocolate and candy canes; for Egyptians it is feast gifts and fireworks, picnics and sports. All across the globe, Christmas is celebrated with traditions and customs that differ and change according to culture.

Brazil
Father Christmas is called Papai Noel. Many Christmas customs are similar to USA or UK. For those who have enough money, a special Christmas meal will be chicken, turkey, ham, rice, salad, pork, fresh and dried fruits, often with beer. Poorer people will just have chicken and rice.

France
In France, Christmas is always called 'Noël. Everyone has a Christmas tree, sometimes decorated in the old way with red ribbons and real white wax candles. Fir trees in the garden are often decorated too, with lights on all night.

Sweden
The most important day is Christmas Eve. A special Christmas meal is eaten on Christmas Eve - ham (pork), herring fish, and brown beans - and this is the time when families give presents to each other. Many people attend a church meeting early on Christmas Day.

Poland
In Poland people start preparing for Christmas at the beginning of December. On Christmas Eve when the first star appears in the sky people sit at a table. They do not forget about leaving an empty place for an expected guest.
At midnight many people go to church to attend a special mass. 25 December is spent at home. The next day people pay and receive visits. Christmas in Poland is the most familiar, traditional and joyful time.
The most popular dishes are: red borsh with pies, carp: fried or in a jelly, pies with mushrooms, herrings, poppy-seed cake. Before the supper members of the family share the holy wafer, after supper they give each other presents which were put under the Christmas tree.


The rest you can find here: http://www.soon.org.uk/country/christmas.htm

We were talking about stereotypes as well. A stereotype is a preconceived idea that attributes certain characteristics (in general) to all the members of class or set. The term is often used with a negative connotation when referring to an oversimplified, exaggerated, or demeaning assumption that a particular individual possesses the characteristics associated with the class due to his or her membership in it. Stereotypes can be used to deny individuals respect or legitimacy based on their membership in that group.

Some stereotypes related to UK:

'Men wearing bowler hats, pin striped suite,
a newspaper under the arm and
carrying a long unopen umbrella, double-decker buses cream teas'

'Long shadows on county cricket grounds, warm beer,
invincible green suburbs, dog lovers and
old maids bicycling through the morning mist'
- John Major (Ex Prime Minister )

'Beer, honesty, Bulldog-type, Royal Family, Cricket, the Weather'
- Dickie Bird (Famous English cricket umpire)



After presenting the topic, Ruth divided us into groups and asked to prepare a presentation about one country. In my case – it was Poland :)

First of all, six famous people who come from my country: Lech Wałęsa, Jan Paweł II, Krzysztof Penderecki, Mikołaj Kopernik, Fryderyk Chopin and Maria Skłodowska-Curie



Our favourite food: dumplings (filled with cheese/meat/fruit), special type of cheese made in mountains (I love it!), pickled cucumbers and sauerkraut stew.



Then our national sport. I think it is volleyball and maybe skiing.



The most popular Polish sportsmen:



When it comes to religion, Poland is predominantly Catholic. Nine out of every ten Poles belong to the Catholic church, and the majority—over sixty percent—attend church regularly.

Typical Polish TV advert which reflects the national character is Knorr advert:




One of songs Polish people are proud of:



Polish best newspaper: Gazeta Wyborcza, in English - Electoral Newspaper:




And this is the trailer of the film you should definitely watch: KATYŃ. It is very short but really moving. (this trailer is with English subtitles)
The film was made by Andrzej Wajda, Polish film director, recipient of an honorary Oscar



It is worth seeing, isn’t it?

I read some interesting chapters from book written by Morris Desmond: People Watching. Body language is very interesting topic, unfortunately very extensive as well. That is why I copied only one page... It is something we were talking about during the lecture :)



To find out more you can always read this book ;)

Social Classes

SOCIAL CLASS AND PUBLIC DISPLAY

Since prehistory, all societies have perceived hierarchy among their members. Leaders and followers, strong and weak, rich and poor: social classifications are universal. Humans have invented numerous ways to classify people—by wealth, power, or prestige; by ability, education, or occupation; even by where they live.

The term "social class" originally referred to groups of people holding similar roles in the economic processes of production and exchange, such as landowner or tenant, employer or employee. Such positions correspond to different levels of status, prestige, and access to political power, but social class eventually took on a more generic meaning and came to refer to all aspects of a person's rank in the social hierarchy.



The Determinant of Social Class in society is the combination of three variables:
occupation, education, and income. In a very general way, these variables all measure the same thing.

"Someone from a very rich family will probably go to schools where kids from other very rich families go. They will have opportunities afforded to them by virtue of their family's money. These kids will fraternize and make friends. Some will fall in love and marry. They will graduate and find employment in companies and law firms owned and operated by their friends and their parents, or go to work for their parents. Get it? A few people inherit large sums of money from their families. These folks are few in number, although it is true that the top 1/5th of the population controls well over 50% of any nation's wealth, which amounts to a lot of inherited social power (for example, the Royals in British society)."

"Similarly, someone from an very poor family will probably go to schools provided by the state. Here they will have to make choices between continued education and early entry into the labor force, provided there is opportunity for them in the labor force. They will meet, make friends, and find spouses in this section, and probably go to work for a company. They'll be the last hired and the first fired."

The kind of education we receive also says something about our social class - anybody who could spend four years in college (whether or not they get their way paid) is obviously in a preferred position of higher status.

"Our Occupation, Education and Income imply a lifestyle, something about family background, special responsibilities, and certain privileges that are enjoyed. We use our social status to get us things - we wear status symbols as a means of recognizing membership in our class. Since we all look alike basically under under our clothes, we use cars, opulent surroundings, special and expensive clothing, and so on to dress according to our class. After all - the rich can smell different from the rest of us if they want to - they spend more time on themselves and spend less time doing the dirty work of life."

The UK Office of National Statistics (ONS) produced a new socio-economic classification in 2001. The reason was to provide a more comprehensive and detailed classification to take newer employment patterns into account.

National Statistics Socio Economic Classification (2001):

Group - Description: Old equivalent
1 -Higher Professional and Managerial: A
2 -Lower Managerial and Professional: B
3 -Intermediate occupations: C1 and C2
4 -Small Employers and non professional self-employed: C1 and C2
5 -Lower Supervisory and technical: C1 and C2
6 -Semi Routine Occupations: D
7 -Routine Occupations: D
8 -Long term unemployed: E

The social grade classification created by the National Readership Survey over 50 years ago looked different:

Grade - Status: Occupation
A - Upper middle class: Higher managerial, administrative or professional
B - Middle class: Intermediate managerial, administrative or professional
C1- Lower middle class: Supervisory or clerical and junior managerial, administrative,professional
C2- Skilled working class: Skilled manual workers
D - Working class: Semi and unskilled manual workers
E - The lowest level of subsistence: Casual or lowest grade workers, pensioners

The significance of social class is this:
•Life opportunities are determined by it
•Upper class members live longer and are healthier
•Those with less than 5 years of education are twice as likely to die early.
• . . . and experience more days of illness
• . . . and are more likely to have premature babies and babies with congenital birth defects.

During the lecture we were comparing some ads created for different social classes.
This is what I found:





The first one definitely relates to luxurious upper class and the second one to the lower middle class. In the first case we can hear slow, classic music, sophisticated background... And in Knorr advert the music is much quicker, less delicate and the whole ad takes place in the studio.

These ads are also related to upper class: