Marketing · Lesson 3

Consumer and organisational markets, segmentation and buying behaviour

WAECNECO

What the syllabus asks

WAEC: consumer market; organisational market: industrial, reseller, government) and 6 (Consumer and organisational behaviour: meaning, factors influencing, decision process). JAMB does not examine Marketing.

NECO: consumer market; organisational market: industrial, reseller, government) and 6 (Consumer and organisational behaviour: meaning, factors influencing, decision process). JAMB does not examine Marketing.

What you will learn

Define a market and state conditions for its existence.
Distinguish consumer and organisational markets.
Explain market segmentation, targeting and positioning.
Describe industrial, reseller and government markets in Nigeria.
Explain consumer behaviour, motivation and Maslow’s hierarchy.
Explain factors influencing consumer behaviour and the buying decision process.
Describe organisational buying behaviour and buying situations.

Key points

Market: actual and potential buyers with need, money and willingness.
Consumer vs organisational (industrial, reseller, government) markets.
Segmentation bases: geographic, demographic, psychographic, behavioural.
Good segments: measurable, accessible, substantial, differentiable, actionable.
Industrial market: few large buyers, derived demand, professional buying.
Resellers want margin, fast-moving goods, credit, support.
Government buys by open competitive bidding (PPA 2007, BPP).
Maslow: physiological, safety, belonging, esteem, self-actualisation.
Factors: cultural, social, personal, psychological.
Decision process: recognition, search, evaluation, purchase, post-purchase.
Buying roles and types: complex, dissonance-reducing, habitual, variety-seeking.
Organisational buying: buying centre, 8-stage process, rebuy/modified/new task.

Start here: Meaning and types of markets

In everyday speech a market is a place: Oja Oba in Ibadan, Ariaria in Aba or Wuse Market in Abuja. In marketing, the word has a wider meaning. A market is the set of all actual and potential buyers of a product who share a need or want that can be satisfied through exchange, and who have the money and willingness to buy. It need not be a physical place: buyers and sellers can meet by telephone, online or through agents. The foreign exchange market and the market for Nigerian music streams have no single location.

Conditions for a market to exist

People with a need or want.
Purchasing power (money or something of value).
Willingness to buy.
Sellers with goods or services to offer.
A means of communication and exchange.

WAEC classification

The syllabus divides markets into two main groups, shown below.

Consumer market: individuals and households who buy goods and services for personal or family consumption, not for resale or production.
Organisational (business) market: organisations that buy for production, resale or to provide public services. It has three parts: the industrial (producer) market, the reseller market and the government market.

Other ways of classifying markets

By area: local, regional, national and international markets.
By product: commodity markets (grains, cocoa), the labour market, the money and capital markets (the Nigerian Exchange in Lagos).
By time: spot (immediate delivery) and futures markets.
By competition: perfect competition, monopoly, oligopoly and monopolistic competition (also studied in Economics).
By periodicity (common in Nigeria): daily markets, periodic markets held every four, five or eight days, and night markets.

Understanding which market a product serves helps the marketer decide the right marketing mix, because consumers and organisations buy in very different ways.

Worked example 3.1

A supermarket buys 500 cartons of noodles from a manufacturer. In which market is the supermarket acting? The reseller market: it buys to resell at a profit.

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Practice questions

1. Individuals and households buying for personal use form the

consumer market
industrial market
reseller market
government market

Show answer

A: consumer market
Many small buyers.

2. Firms buying goods to make other goods form the

consumer market
reseller market
black market
industrial (producer) market

Show answer

D: industrial (producer) market
Demand is derived.

3. Dividing a market by age, sex and income is

geographic segmentation
behavioural segmentation
demographic segmentation
psychographic segmentation

Show answer

C: demographic segmentation
Measurable characteristics.

4. Dividing a market by region or town is

mass marketing
geographic segmentation
demographic segmentation
psychographic segmentation

Show answer

B: geographic segmentation
Location-based.

5. In Maslow’s hierarchy, the lowest needs are

physiological needs
esteem needs
self-actualisation
social needs

Show answer

A: physiological needs
Food, water, shelter.

Key words

Market: All actual and potential buyers of a product.
Consumer market: Households buying for personal use.
Industrial market: Organisations buying to produce other goods.
Reseller market: Buyers who purchase to resell at a profit.
Government market: Public bodies buying to provide services.
Segmentation: Dividing a market into similar groups.
Target market: The segment a firm chooses to serve.
Positioning: The place a product holds in buyers’ minds.
Derived demand: Demand arising from demand for another product.
Consumer behaviour: How people select, buy, use and dispose of products.
Reference group: A group people compare themselves with.
Cognitive dissonance: Post-purchase doubt.

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