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.
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.
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.
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.
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.
4.2.1: The Organizational Purchase Decision Process
4.2.2: The Characteristics of Organizational Purchases
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.
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.
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.
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Study Guide: Unit 4
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Unit 4 Assessment
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