Unit – IV: Consumer Markets: Model of Consumer Behavior, Seven Os Structure, Factors

Affecting Consumer Behavior.Stages in the Adoption Process, Industrial Markets -

Characteristics, Industrial Buyer Behavior, Services Markets-Characteristics, and Strategies.

__________________________________________________________________________

[First half is in the running notes of the students.]

Philip Kotler considers five steps in consumer adoption process, such as awareness, interest,
evaluation, trial, and adoption. On the other hand, William Stanton considers six steps, such
as awareness stage, interest and information stage, evaluation stage, trial stage, adoption
stage, and post-adoption stage. We will follow six steps.

1. Awareness Stage:
Individual consumer becomes aware of the innovation. He is exposed to innovation but
knows very little regarding the innovation. He has only limited information about it. He is
aware of either by discussion with friends, relatives, salesmen, or dealers. He gets idea about
a new product from various means of advertising like newspapers, magazines, Internet,
television, outdoor media, etc. At this stage, he doesn’t give much attention to the new
product.

2. Interest and Information Stage:

In this stage, the consumer becomes interested in innovation and tries to collect more
information. He collects information from advertising media, salesmen, dealers, current
users, or directly from company. He tries to know about qualities, features, functions, risk,
producers, brand, colour, shape, price, incentives, availability, services, and other relevant
aspects. Simply, he collects as much information as he can.

3. Evaluation Stage:
Now, accumulated information is used to evaluate the innovation. The consumer considers all
the significant aspects to judge the worth of innovation. He compares different aspects of
innovation like qualities, features, performance, price, after-sales services, etc., with the
existing products to arrive at the decision whether the innovation should be tried out.

4. Trial Stage:
Consumer is ready to try or test the new product. He practically examines it. He tries out the
innovation in a small scale to get self-experience. He can buy the product, or can use free
samples. This is an important stage as it determines whether to buy it.

5. Adoption Stage:
If trial produces satisfactory results, finally the consumer decides to adopt/buy the innovation.
He decides on quantity, type, model, dealer, payment, and other issues. He purchases the
product and consumes individually or jointly with other members.

1
6. Post Adoption Behaviour Stage:
This is the last stage of consumer adoption. If a consumer satisfies with a new product and
related services, he continues buying it frequently, and vice-versa. He becomes a regular user
of innovation and also talks favourable to others. This is a crucial step for a marketer.

In every stage of consumer adoption, a marketer is required to facilitate consumers. He must

take all possible actions to make them try, buy, and repeat buy the innovation. Be clear that
every type of consumer (innovators, early adopters, early majority, late majority, or laggards)
follows all the stages of adoption process, but takes different amount of time to adopt the
innovation.

Industrial Marketing

The word Industrial Marketing is also treated as Business-to-Business Marketing, or

Business Marketing, or Organizational Marketing. Industrial marketing/business marketing is
to market the products and services to business organizations: manufacturing companies,
government undertakings, private sector organisations, educational institutions, hospitals,
distributors, and dealers. The business organizations, buy products and services to satisfy
many objectives like production of goods and services, making profits, reducing costs, and,
so on.

Characteristics of the industrial markets

The industrial market is characterized by six fundamental aspects:

1- Few buyers
The industrial market is not oriented to a large number of buyers as might be supposed, but
focuses on the most suitable buyers and in which they can give immediate use to the product.

Therefore, the clients are selected, strategically chosen, so that sales are fruitful.

2- Geographical distribution
It tends to concentrate in very specific urban or rural areas. The industrial market is not
ubiquitous, but is in specific places where there may be a large volume of production, which
in turn requires a large number of personnel to move around the factory.

3- Future Vision
The industrial market does not pursue the satisfaction of the immediate needs of users;
Rather, he wants to think further and so he makes long-term plans that are not susceptible to
price sensitivity.

2
In this way, this type of market always tries to renew itself and reinvent its products, in order
not to be delayed.

4- Reduced impact on demand

Specifically in the final demand. The industrial market stands out because it does not
influence much in what the users want to buy, since they already have some established
requirements that must be taken care of by the manufacturer.

5- High purchasing power

The industrial market is able to concentrate a lot of purchasing power for the simple fact that
it has a high budget in which they can have more with less, as it happens with the wholesale
companies.

Services:

Introduction

The world economy nowadays is increasingly characterized as a service economy. This is

primarily due to the increasing importance and share of the service sector in the economies of
most developed and developing countries. In fact, the growth of the service sector has long
been considered as indicative of a country’s economic progress.

Economic history tells us that all developing nations have invariably experienced a shift from
agriculture to industry and then to the service sector as the main stay of the economy.

This shift has also brought about a change in the definition of goods and services themselves.
No longer are goods considered separate from services. Rather, services now increasingly
represent an integral part of the product and this interconnectedness of goods and services is
represented on a goods-services continuum.

Definition and characteristics of Services

The American Marketing Association defines services as - “Activities, benefits and

satisfactions which are offered for sale or are provided in connection with the sale of goods.”

The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that
which primarily differentiates it from a product. Also, it poses a unique challenge to those
engaged in marketing a service as they need to attach tangible attributes to an otherwise
intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service offering is

unique and cannot be exactly repeated even by the same service provider. While
products can be mass produced and be homogenous the same is not true of services.
eg: All burgers of a particular flavor at McDonalds are almost identical. However, the

3
 same is not true of the service rendered by the same counter staff consecutively to two
customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they have
been used. Once rendered to a customer the service is completely consumed and
cannot be delivered to another customer. eg: A customer dissatisfied with the services
of a barber cannot return the service of the haircut that was rendered to him. At the
most he may decide not to visit that particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to the fact
that services are generated and consumed within the same time frame. Eg: a haircut is
delivered to and consumed by a customer simultaneously unlike, say, a takeaway
burger which the customer may consume even after a few hours of purchase.
Moreover, it is very difficult to separate a service from the service provider. Eg: the
barber is necessarily a part of the service of a haircut that he is delivering to his
customer.

Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut
or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a
tangible product. Eg: Home delivery options offered by restaurants above a minimum
bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation Production, distribution and consumption are
from their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible