Beckman, Kurtz and Boone (1997) further note that market research provides information that identifies marketing problems and opportunities, allows marketing actions to be created, revised and assessed, monitors market performance and improves the overall effectiveness of marketing initiatives. Despite the numerous benefits of collecting, analyzing and applying data to the marketing process, marketers must realize that some data is unattainable due to the expense of collecting, analyzing, storing or retrieving it. Marketers must further realize that difficult decisions often need to be made when determining what data to collect, archive and analyze.
A plethora of information exists in the area of market data. Demographic information alone can yield significant useful data, including details on consumers' age, income, race, education level, interests, occupation, residence and other similar data. However the expense involved in collecting demographic information from every consumer would be cost-prohibitive to any organization in relation to the benefits attained through the collection of this information. Organizations can overcome this limitation by relying on data collected by other organizations (such as census data collected by many national governments), using random samples to provide an overview of client attributes, or using technology to streamline the collection, storage and retrieval of client information that can be easily obtained (membership cards, electronic surveys).
Information on consumer trends can also be collected. Again the level of detail that is required to collect and project consumer trends is often limited to only the largest corporations such as multi-national organizations. Organizations are able to overcome this limitation by relying on other organizations that make this field their area of expertise such as advertising agencies and specialized consultants.
Competitor data can also be too expensive to obtain in relation to its value. Examples in this category of information include trade secrets, planned new products and strategies to reposition existing products. Often this type of data could be collected, but would involve actions bordering on espionage or other illegal, unethical or immoral actions, or would require complex laboratory procedures or intensive human interventions to uncover protected trade secrets. While some companies will go to these extremes if the stakes are high enough, most organizations settle for developing a similar competing product that is often close to the original, but still discernible by most consumers (Coke vs. Pepsi, seasonings and sauces used by KFC and McDonalds vs. competitors).
External data can also be expensive to collect, often with the costs of collection outweighing the benefits of the information gathered. For example, most organizations are unable to individually collect information relating to upcoming political or legislative changes, or to monitor changes in the overall economy. In these instances, organizations can rely on trade organizations, lobby groups or government organizations. Organizations also have the option of simply forecasting their own projections based on the level of information they can afford, and hope their projected future approximates reality.
Technology-based information is the final category of information that can be too expensive to obtain in relation to its value that will be explored. In some cases, the overall cost of implementing a technology-based information-gathering system such as a point-of-sale system prevents organizations from collecting the data that such systems can collect. Point-of-sale systems have complex capabilities, including monitoring inventory levels and stock-rotation schedules, just-in-time ordering, volume discounts, select client discounts, consumer information, and many other types of information. For small, independently owned businesses, the cost of purchasing and maintaining such systems far exceeds the benefits provided by such systems. For medium-sized organizations, compromises might need to be made in the capability of the technology for the type of information that can be collected, stored and retrieved. For large organizations, decisions need to be made concerning where to draw the line concerning data collection vs. no data collection.
In summary, information within a marketing context is extremely positive, because information can help identify opportunities and weaknesses, thereby leading to innovations that positively affect an organization's well-being. However a cost is associated with collecting information, and organizations must constantly assess whether the value obtained by collecting any given data exceeds the cost of the data collection.
Compare and contrast the buying behavior of final consumer and organizational buyers. In what ways are they most similar and in what ways are they most different?
Buyers of products and services from organizations are often classified as either final consumers or organizational buyers. Final consumers are generally members of the general public who represent their own interests, the interests of their family or the interests of a social group. Organizational buyers, on the other hand, represent the interests of their organization, and are therefore influenced by different considerations in the purchasing process than are final consumers. The similarities and differences between these two distinct categories of buyers will be presented in the remainder of this paper.
The buying behavior of final consumers often falls in one of three categories: impulse buying, routine buying and one-time buying. Impulse buying often corresponds to items such as fashion, snacks and other small item/low cost items. Routine buying covers ongoing purchases that often represent brand loyalty such as groceries and other household staples (toilet paper, detergents, tissue paper, etc.). One-time buying includes items that are often well-researched and occur rarely throughout a person's life, covering acquisitions such as televisions, furniture, homes and automobiles. Kotler, Cunningham and Turner (2001) note that final consumers, when making purchasing decisions, are often guided by factors such as social class (which determines resources available for both non-discretionary items and non-routine purchases), culture, family and social network influences, and a range of personal factors. These personal factors vary significantly, and are influenced by the stage in the life cycle (single, married, married with children, retired, widowed), lifestyle choices and personal values, occupation and income levels, personality and personal motivators (style, rebel, trendy, socially or environmentally aware), and personal beliefs. Many of these motivators are individually focused, and reflect who a person is through their personal purchasing decisions.
Organizational buyers, on the other hand, are generally smaller in overall numbers than final consumers, but represent significantly greater purchasing ability. Organizational buyers often rely on relationships that have been developed with suppliers, and remain loyal to sellers who nurture the relationship. Organizational buyers are often influenced by a greater variety of factors than final consumers, who tend to rely on personal choice and judgement. Organizational buyers must satisfy processes and procedures that are in place in their organization, such as purchasing specifications, dollar limits and time-frames. Committees and senior managers often direct the decisions of purchases within organizations, thereby reducing the individual authority and autonomy of the organizational buyer.
Industrial buyers are often exposed to ongoing sales calls, since industrial sales take a significantly larger investment in time to convert potential buyers to actual buyers. A wide variety of buying arrangements also exists for organizational buyers, ranging from outright purchase to leases to trade-ins. Organizational buyers must therefore be conversant in a wide range of purchasing options, to facilitate meeting organizational objectives through appropriate purchasing techniques. Environmental factors can also significantly affect organizational purchasing behaviors, with expected economic downturns reducing buying needs while economic upturns have the effect of increasing buying needs.
Organizational buyers are influenced by personal factors such as preferences and biases, much in the same way that final consumers are influenced by these factors. Preferences relating to style, durability, country-of-origin and other subjective factors play an important role for both final consumers and organizational buyers. Culture also influences both sets of buyers, and can be determined by the country, region or locality in which the buyer operates.
In conclusion, final consumers and organizational buyers share a range of similarities in their buying behaviors, such as individual preferences and the geographic area in which they are located. A range of differences also exist, ranging from flexibility for final consumers to established purchasing procedures for organizational buyers, the influence of economic forecasts (final consumers looking at the short-term while organizational buyers focus on the long-term), and the nature of the sales/buyer relationship (with final consumers being less reliant on relationships and organizational buyers being more reliant on relationships). Marketers must understand the differences and similarities between these two distinct types of clients if they want to truly capitalize on the opportunities presented by each category of customer.
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