Understanding Buyer Behavior in the Context of Product Adaptation - a Case Study of Volvo Trucks
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Halmstad University School of Business and Engineering Master Program in International Marketing Master of Science Degree Understanding Buyer Behavior in the Context of Product Adaptation - A Case Study of Volvo Trucks - Dissertation in International Marketing, 15 ECTS th 28 May, 2012 Authors: Douglas Eduard Steinert, 880727-T492 Fernanda Bento Zen, 890721-T125 Supervisor: Navid Ghannad Examiner: Gabriel Awuah ABSTRACT This dissertation studies the relationship of product adaptation and buyer behavior. By standardizing products, it was possible for organizations to produce in large scale and make them accessible for many different markets. Nevertheless, these different markets also have particularities which cannot be ignored and therefore, product adaptation is necessary to some extent; even for standardized products. Organizations should then optimize their product adaptation police in order to reach an assertive marketing strategy. In this regard, this study develops a model which predicts product adaptation from the understanding of buyer behavior. The understanding of buyer behavior, from the seller organization perspective, can provide organizations with a wide range of information to predict product adaptation. It was concluded, by using the case of Volvo, that organizations can optimize their marketing strategy by predicting product adaptation from observing and understanding their buyer´s behavior looking at the following variables: environmental influences focusing as well on the industry and segment, organizational factors, motivational factors and the nature of decision-making. Besides these variables, the data coming from after-sale processes and trend reports also help to predict product adaptation. Keywords: Product Standardization, Product Adaptation, Buyer Behavior, Volvo 2 ACKNKOWLEGEMENT We want firstly to thank God for the privilege of life and inspiration to us given. We would also like to express our gratitude to our parents and friends whom have always given unconditional support. We must as well manifest our acknowledgment to our supervisor Navid Ghannad who has helped us through the whole process. Last but not least, we thank Volvo for working with us on this project. 3 TABLE OF CONTENT 1. INTRODUCTION ........................................................................................................ 8 1.1 BACKGROUND .................................................................................................... 8 1.2 PROBLEM AND FOCUS ...................................................................................... 9 1.3 PURPOSE ............................................................................................................. 10 1.4 RESEARCH QUESTIONS .................................................................................. 10 1.5 DELIMITATION .................................................................................................. 10 2. THEORETICAL FRAMEWORK .............................................................................. 11 2.1 PRODUCT STANDARDIZATION STRATEGY ............................................... 11 2.1.1 Standardization Benefits and Disadvantages ................................................. 12 2.1.2 Degrees of Standardization ............................................................................ 13 2.2 PRODUCT ADAPTATION STRATEGY ........................................................... 14 2.2.1 Types of Adaptation ....................................................................................... 14 2.2.2 Mandatory Product Modification ................................................................... 15 2.2.3 Optional Product Modification....................................................................... 15 2.3 BUYER BEHAVIOR ........................................................................................... 16 2.4 ORGANIZATIONAL BUYER BEHAVIOR ...................................................... 18 2.4.1 Overview of a General Model for Organizational Buying Behavior ............. 18 2.4.2 A Model of Industrial Buyer Behavior .......................................................... 22 2.5 UNDERSTANDING PRODUCT ADAPTATION THROUGH CONPREHENDING BUYER BEHAVIOR .............................................................. 25 3. METHODOLOGY ..................................................................................................... 29 3.1 PURPOSE OF THE RESEACRH ........................................................................ 29 3.2 RESEARCH APPROACH ................................................................................... 29 3.3 RESEARCH METHOD ....................................................................................... 29 3.4 RESEARCH STRATEGY .................................................................................... 30 3.5 CASE SELECTION ............................................................................................. 30 3.6 DATA COLLECTION ......................................................................................... 31 3.7 DATA ANALYSIS ............................................................................................... 32 3.8 RELIABILITY AND VALIDITY ........................................................................ 32 3.8.1 Reliability ....................................................................................................... 33 3.8.2 Validity ........................................................................................................... 33 4. EMPIRICAL FINDINGS ........................................................................................... 34 4 4.1 VOLVO GROUP .................................................................................................. 34 4.1.1 General Information ....................................................................................... 34 4.1.2 Product Adaptation Process ........................................................................... 36 4.1.3 Understanding Buyer Behavior ...................................................................... 40 5. ANALYSIS ................................................................................................................ 43 5.1 PRODUCT STANDARDIZATION AND PRODUCT ADAPTATION ............. 43 5.2 BUYER BEHAVIOR ........................................................................................... 45 5.2.1 Understanding Product Adaptation Through Comprehending Buyer Behavior ................................................................................................................................. 45 6. CONCLUSIONS ........................................................................................................ 50 6.1 RECOMMENDATIONS AND FURTHER IMPLICATIONS ............................ 51 6.1.1 Research Recommendations .......................................................................... 51 6.1.2 Managerial Recommendations ....................................................................... 51 6.2 LIMITATIONS ..................................................................................................... 52 REFERENCES ............................................................................................................... 53 APPENDIX A – INTERVIEW GUIDE ......................................................................... 56 5 LIST OF TABLES Table 1: Centric Approach of Product Standardization. ................................................ 13 Table 2: A comparison of purchase decision-making characteristics in organizational and consumer contexts.................................................................................................... 17 6 LIST OF FIGURES Figure 1: A model of organizational buyer behavior ..................................................... 19 Figure 2: An integrative model of industrial buyer behavior ......................................... 23 Figure 3: A model to predict product adaptation through comprehending buyer behavior ........................................................................................................................................ 26 Figure 4: Common customer adaptation requests. ......................................................... 37 Figure 5: 2010 Order and CA execution overview ........................................................ 38 Figure 6: Customer adaptation conversion level ............................................................ 39 Figure 7: The customer adaptation process .................................................................... 40 Figure 8: The Infinity Loop ............................................................................................ 41 Figure 9: Improvement on the model to predict product adaptation through comprehending buyer behavior ...................................................................................... 48 7 1. INTRODUCTION 1.1 BACKGROUND The process of globalization is inherent to everyone. At the end of the 20th century, communication and transportation became affordable for many segments in society and a more significant interaction among nations turned out to be inevitable. Waters (1995, referred in Robertson´s, 1992, p. 8) defines globalizations as per the following: “globalization as a concept refers both to the comprehension of the world and the intensification of consciousness of the world as a whole […], both concrete global interdependence and consciousness of the global whole.” With a larger