The Influence of Branding and Packaging on Consumer vs. Commercial Markets
This paper was originally prepared on 31 October 1995 for Dr. Eugene Fram, College of Business, Rochester Institute of Technology. It was written to satisfy a course requirement in Principles of Marketing.
Branding and packaging certainly influence consumer product sales, although they have little influence on the sale of products to industrial customers. This is because product performance and service are the only critical variables in industrial purchases. The best brands convey a sense of quality, creating a long-term relationship with the customer. A brand may also serve to identify the seller or maker of a product. In addition to these qualities of a brand, brand names may also convey other levels of meaning, including attributes, benefits, values, and personality.
There are two basic types of consumers: private consumers, and commercial consumers. The private consumer market is the world's largest, totalling 250 million in the United States alone. Not only does the private consumer buy for himself, but he also buys products as gifts for others.
The buying behavior of the private consumer can be characterized by using a five-part model (Stanton 176). This model starts with the buying-decision process. The buying-decision process is driven by information about products and service, and has a great influence on final purchase.
The second part is the information-gathering process. In this step, the buyer researches information about products by reading, talking with friends, or talking with store employees.
The third step, social and group forces, plays an important role in the private comsumer buying process. It is in this step that the values and expectations of family, friends, and co-workers have an effect on the consumer's buying decision.
The fourth step is the influence of psychological forces. This refers to the way in which the consumer interprets the world around him.
The fifth step in the model is the consumer's situational factors. This includes his personal condition, as well as when, where, how, and why he buys.
The private consumer generally has an emotional response to products, and this is where branding has its greatest effect (Loden 7). In many cases, a brand creates a feeling about a product, or helps a consumer to create an attitude about a particular product or service. The product or service may remain the same, but the branding of the product can make the customer hold a different opinion of the product.
Branding has an influence on four of the five stages of the buyer behavior model -- every step except for his personal psychological forces. This is why branding is so powerful in the consumer market.
The second type of consumer is the commercial consumer. In quantitative terms, the commercial consumer makes up a smaller part of the market, although the commercial consumer spends more money per transaction when compared to the private consumer (Howard 380).
The buying decision process of the commercial consumer involves up to five stages, depending on the particular buying situation (Stanton 200). The first stage is need recognition. It is in this stage that the company realizes a need for the purchase of a particular product. The need may be realized as a result of internal or external stimuli. For example, the company may need new equipment so that it may manufacture different products, or a machine currently in use may require repair or replacement. A manager may be unhappy with a current supplier's service or quality, or a new idea for a product or service may be introduced to management. (Kotler 200).
The second stage is the identification of the alternatives. These alternatives include the companyŐs manufacturing of the needed product on its own, the selection of other, similar, products, or the decision to not buy any new product. In general, companies are buying product more often than they are producing products.
The third stage, the evaluation of the alternatives, attempts to weigh the pros and cons of each alternative so that a logical decision can be made.
The fourth stage is the decision to purchase. In the business environment, these decisions are usually well-informed, and are made jointly among several people. The time taken to make a decision is often quite long.
The final stage is post-purchase behavior. In this stage, the company evaluates the choice it has made, deciding if the purchase was adequate to solve the problem.
Branding and packaging have little involvement in the stages of the commercial consumerŐs buying-decision process. The commercial consumer's buying decision process is based soley on facts -- cost of product, reliability, ability of the supplier to deliver goods on time, and so forth. Branding and packaging have no effect on these variables.
Differences Between the Private and Commercial Consumers
These five stages of the buying-decision process of the commercial consumer compares to that of ultimate, or private, consumers. The major differences between the private and commercial consumers are fairly simple to pinpoint.
First, the private consumer usually makes decisions for himself, whereas the commercial buyer's decision is usually made buy a group of individuals who take the roles of users, influencers, deciders, gatekeepers, and buyers (Stanton 200).
In the case of the private consumer, these decisions may be based on emotions. In the commercial environment, the emotions of any single person are invalidated simply as a result of the large number of people involved in the decision process. Even though there may be strongly opinionated members, these opinions may be outweighed by other opinions within the group.
The commercial consumer makes a buying decision using a set method, while the private consumer frequently makes impulse buys. This is unheard of in the commercial market. All commercial purchases are planned, and the alternatives weighed, before a decision to buy is made. Generally, the negotiation period is a long one (Stanton 200).
The mass media play an important role in the buying decision of the private consumer. The constant repetition of commercial advertisements serve to drive a product's brand attributes into a customer's mind. Greater presence in the media equals greater presence in the minds of customers, and that usually translates to greater sales. The mass media have little influence on the purchasing habits of the commercial consumer, again, this is because emotions and the forces of social groups are generally not involved. Studies have shown that advertising on mass media has little or no effect on commercial buyers (Howard 392).
Branding and packaging have an effect on consumer sales, but not on industrial sales. This is due to two main reasons. First, there is a difference in buying patterns of commercial versus private consumers. Second, private and commercial consumers have different needs.
Private consumers often shop to fulfill wants, while commercial consumers make purchases to fulfill needs. In the case of private consumers, purchases are often reactive, responding to advertisments which create a percieved need (which is actually a want, not a need). Commercial purchasing is often proactive, initiated by a problem, but then actively researched to make a purchase which will result in the solution of that problem.
Those who are in marketing must take these facts into consideration, and be able to identify the type of customer so that an effective marketing plan may be designed. While emotional advertising may attract private consumers, presenting the cold, hard facts in a clear manner will be the key to selling to commercial consumers.
Howard, Buyer Behavior in Marketing Strategy.
© 1992-2000 Sean E. Williams