Unit 4: Consumer, Organizational, and Service Marketing
Consumer and organizational marketing differ in several aspects and approaches undertaken by the firm. Consumer buying behaviors differ from buying behaviors and processes undertaken by organizations. Service marketing presents different challenges to firms providing services solely or services related to product offerings.
Completing this unit should take you approximately 6 hours.
Upon successful completion of this unit, you will be able to:
- describe the characteristics of consumer marketing and buyer behavior;
- explain the aspects of organizational markets and buying procedures; and
- describe the distinctive characteristics of marketing services.
4.1: Consumer Markets and Product Categories
Consumer marketing, or providing products to the final consumer, has distinctive challenges in applying the marketing mix. As there are numerous types of consumer products, marketers tend to categorize them into product groupings or product offerings.
Buyer behavior differs according to the type of consumer goods being sought and purchased. Accordingly, product offerings are categorized as convenience offerings, shopping offerings, specialty offerings, and unsought offerings.
Read this chapter on product offerings. The categories mentioned generally relate to the consumer and the consumer's method of seeking and selecting the product and ultimately purchasing the product.
4.1.1: The Consumer Purchase Decision Process
Consumer purchasing decisions can range from impulsive purchases requiring little thinking to high-cost purchases, often requiring planning, researching, and sometimes analysis.
For example, we may run out of chewing gum and decide to buy another pack. We typically use mind scripts for simple purchases such as this and by our usual brand the next time we go to our usual store.
For the purchase of a house or an automobile, there is a greater degree of involvement in the purchase process. Accordingly, we generally follow the standard purchase decision process when making a significant purchase.
Read these sections on the consumer purchase decision process. Consider the degree of involvement in a purchase, and how this would apply to some, but not all purchasing decisions.
This video explains impulse buying. Note that this is one type of consumer behavior, and the video provides some insight into the psychology of impulse buying behaviors.
This video pertains to the purchase of an automobile, requiring a high degree of involvement in the purchase decision. Most automobile transactions today are financed with a loan or leased. Thus, the buying decision is more complicated. This video illustrates how financing options are an important component of a large purchase.
4.1.2: Affect and Cognition in Buyer Behavior
Several factors are present when making a purchase decision. We make logical or "cognitive" decisions and emotional or "affective" decisions when we make a purchase.
Therefore, marketers must be aware of and address consumers' affect and cognition factors when deciding on a purchase. Affect describes how we feel, and cognition describes how we think about a product.
Many purchases with a high degree of involvement, such as a house or an automobile, invoke the cognitive and affective parts of the brain. Simply stated, cognition is "left brain" functioning, and affect is considered to be "right brain" functioning. Although the functioning of the brain is much more involved and complicated, for marketing purposes we must be aware of the two important forces at hand in making purchase decisions.
Read this section concerning the factors influencing buyer behavior. Consider these factors based upon your own purchase decisions.
This video provides a comprehensive description of the factors affecting consumer buyer behavior. As purchasers of goods we are sometimes unaware of the factors which affect our general behavior and our purchase behavior. As marketers, we must consider how and why people make purchasing decisions, and what factors influence our actions.
- This case study reviews the consumer buying factors of durable goods from a respondent sample in Nagaland, India.
4.2: Organizational Market Types
Organizational buyers are varied and include for-profit businesses, non-profit organizations, and governmental entities at different levels. Their purchasing process includes factors different from those seen in consumer markets.
Organizations purchase goods and services in an orderly fashion and for exceptionally good reasons. The purchases are usually monetarily large and involve collective decision-making. Furthermore, purchase decisions and the purchase decision processes generally take a long time compared to consumer purchases. The emphasis is on running the organization, so factors of quality, delivery, and reliability are often at the forefront of the purchase decision.
Read these sections, being sure to click through to the next section. Often referred to as B2B markets, organizational buyers differ significantly in type. A government buyer, for example, is not a business. However, governments at all levels are significant buyers of goods and services. Similarly, a reseller, such as a wholesaler or retailer, is in a different business than an industrial buyer purchasing raw materials for a manufacturing process.
4.2.1: The Organizational Purchase Decision Process
Read this section on the Organization Buying Process. The purchase decision process is more formal than the consumer purchase decision process. Consequently, decision making is more time consuming as decisions usually involve large purchases and involve several people.
Global purchasing and global supply chains are now common in most industries. This scholarly article written by Robin von Haartman and Lars Bengtsson describes and analyzes factors of global and regional sourcing and purchasing.
4.2.2: The Characteristics of Organizational Purchases
This text explains the importance of understanding different individuals' roles in organizational purchases. Note the terminology used: influencers, deciders, users, and gatekeepers. To be effective in organizational markets, the marketer must know how the process works and who is involved.
This video discusses consultative selling and how it applies to selling to organizational buyers. Pay attention to the aspect of risk in organizational buying decisions.
This video addresses the fact that many organizational purchases involve several buyers, or persons involved in the buying decision.
Outsourcing is more common in business today. Often referred to as "make or buy" decisions, firms often assess the costs and benefits of outsourcing goods and services compared to performing a service or making a product internally. This brief video provides some insight into the analysis.
4.2.3 Non-Profit and Governmental Marketing
Unlike governmental organizations, non-profit organizations buy goods and services and sell or provide goods and services. Governments buy or procure goods and services for the public domain.
Marketing to non-profits and government organizations is similar to marketing to business buyers. The motive for the non-profit or the government is different, however, because they are not profit-driven. So, the buying process is formal and involves collective decision-making. Purchasing decisions take a long time, and the purchases are usually large.
This video explains how to use the U.S. government's database for securing federal government business.
This brief video by Ohio Development Services Agency provides information on how to market and sell to the state of Ohio. States, counties, and municipalities all have needs for goods and services. Marketers that intend to target these governmental buyers must understand the processes involved in government procurement practices.
This scholarly article explores the elements of service marketing within the banking industry. Note the emphasis on quality of service, customer satisfaction, and customer loyalty.
4.3: The Challenges of Marketing Services
Marketing of services uses the marketing mix, but the challenges of service marketing are rather distinctive compared to product marketing. In the U.S. economy, there has been a transition into what we now call a "service economy". Manufacturing of products has gradually shifted to countries that have low labor costs; therefore, service marketing has become more important for service providers to understand and implement over the past few decades.
We will examine the "4 Is" of service marketing, which are intangibility, inseparability, inconsistency, and inventory. These aspects of services require the marketer to consider the distinctive challenges of marketing services to consumers and organizations.
This video describes the continuum of product and services, and how to design an effective service to meet buyer needs.
This video provides insight on the important factors of services marketing. The emphasis is on service quality rather than price.
4.3.1: The "4 Is" of Service Marketing
The "4 Is" of service marketing differentiate the challenges of marketing services compared to products. What are they?
- Intangibility. Services are intangible, unlike products. They cannot be touched and sometimes cannot be seen. Largely, before purchased, services are based on an assumption or a promise of customer satisfaction. For example, purchasing a massage assumes or promises that the customer will feel better after receiving the service.
- Inconsistency. Services are usually provided by people, and people are inconsistent among themselves in providing a service and sometimes personally inconsistent in providing services to the customer. For example, a haircut can be good on one visit to the stylist and not as good on another visit.
- Inseparability. You cannot separate the service from the provider of the service. Services are usually performed by service providers, so if there is no provider, there is no service. Services are sometimes provided by machines, such as a vending machine or an ATM. If the machine does not function, there is no service.
- Inventory. Services cannot be kept in inventory like products can. So idle production capacity may exist if a firm pays for service providers but there are few customers. A doctor's office will staff its employees based on patients' appointments and perhaps walk-in patients. If patients cancel or do not show up, the practice has idle capacity that cannot be saved or inventoried. Furthermore, an empty seat on an airplane flight cannot be saved or inventoried for another time. It is a loss that cannot be inventoried.
This video demonstrates effective sales techniques in selling the intangible service of life insurance. As life insurance is generally considered an unsought product or service, and it is intangible, educating the customer and selling the benefit must be emphasized. Building trust is also important in marketing financial services.
Unit 4 Study Resources
This review video is an excellent way to review what you've learned so far and is presented by one of the professors who created the course.
Watch this as you work through the unit and prepare to take the final exam.
We also recommend that you review this Study Guide before taking the Unit 4 Assessment.
Unit 4 Assessment
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Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
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