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Figure [21] Expectations and performance determine organizational pro ts
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Focus on the customer [25]
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Generic demand
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Demographic factors population growth migration age profiles urbanization Economic factors discretionary income income and price elasticity Differentiation image price technology Competition competitor products and services competitor prices
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Figure [22] Major in uences on demand
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It is a matter of examining a continuum of buying behaviour In both consumer and industrial markets there are a number of identi able in uences on the demand for products and services For both markets it is possible to distinguish between generic demand, which is in uenced by demographic and economic factors, and brand demand, which is primarily in uenced by the degree of the organization s product differentiation and the extent of competition (Figure 22) Organizational markets tend to be far more complex than consumer markets because they involve a more intricate network of buying in uences The technical nature of many of the products purchased adds to the complexity of industrial marketing Generally, the size of the purchase in money terms is greater and the buying relationship is more complex and long term In the marketing of industrial products, technology is a more pervasive element which frequently produces a technologically driven production orientation rather than a marketing orientation It is possible to distinguish organizational markets from consumer markets in three respects: market structure buying decisions how companies reach their customers In regard to structure, a small number of users in organizational markets usually account for a very high proportion of total sales in that market In addition, many industrial products sold, eg equipment and machinery, usually have a high unit value and are not purchased frequently The purchasing decision for capital products can usually be postponed, something which can be dif cult for many consumer products
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[26] Strategic Marketing
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Buyers in industrial markets are thought to be more rational than buyers in consumer markets A degree of rationality enters into all purchases but it is necessary to recognize that buying motivations in organizational markets are also in uenced by psychological and political factors in addition to the more rational economic factors that are often stated as the only basis for industrial purchases Buying decisions in organizational markets are also in uenced by the derived demand for the products and services their products serve as inputs Demand in organizational markets depends on the demand for other industrial or consumer products In this sense the demand for the output of industrial markets is derived from the demand arising in other markets In organizational markets there is usually greater emphasis on direct selling to the nal user Products have to be demonstrated, technical issues must be exploited, and special before- and after-sales services provided If distributors are involved in the process, they are usually customers and may be regarded as nal users by the manufacturer In such circumstances the manufacturer must consider providing customer satisfaction to distributors and nal users
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Exchange relationships in marketing
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Most marketing exchanges between the organization and its customers are characterized by transactions involving a product or service being sold for money where the latent reasons for the transaction are economic, social and psychological in nature Based on this latent structure, marketing exchanges may be economic, symbolic or some combination of the two Marketing exchange as economic is built on the concept of economic man which assumes that people: are rational in behaviour; attempt to maximize satisfaction through exchange; possess complete information on alternatives available to them; and that exchanges are reasonably free from outside in uences Symbolic exchange, in contrast, refers to the mutual transfer of psychological, social or other intangible bene ts associated with products and services People buy things not only for what they can do, but also for what they mean (Levy 1959, p 118) But experience demonstrates that marketing exchanges involve economic and symbolic dimensions which are often quite dif cult to separate Successful transactions depend on deriving an appropriate mix of the two Customers seek economic and symbolic rewards in their purchases and relationships with organizations which leads to the suggestion of the existence of a marketing person (Bagozzi 1975, p 37) who:
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Focus on the customer [27]
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is sometimes rational, sometimes irrational; is motivated by tangible and intangible rewards; engages in economic and symbolic exchanges; faces incomplete information; strives to maximize bene ts but settles for less than optimum gains in exchanges; is constrained by individual and social factors
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