introduction*of*marketing! ! ! ! ! ! ! ! ! 9/2/14* · o however,!the!guiding!factor!with!all ......
TRANSCRIPT
Introduction*of*Marketing! ! ! ! ! ! ! ! ! 9/2/14*!
Intro!Film!
− 4!P’s!of!marketing!
o Product!
! Involve!creating!goods!and!services!that!satisfy!the!needs!and!wants!of!customers!
! Ex:!think!candles!with!good!burn!quality,!aesthetic!quality,!color,!fragrance,!packaging!
! Think!about!the!quality!!o Place!
! Concerned!to!get!the!right!products!at!the!right!place!at!the!right!time!
! Having!products!available!in!store!in!places!that!are!convenient!for!buyers!
o Price!
! Directly!effects!sales!and!profits!
! Costs,!price!sensitivity,!competitors!
o Promotion!
! All!aspects!of!promoting!a!product!
! i.e.!Chik!fil!A!–!billboards,!cow!calendars,!etc.!
! digital!signage!–!high!attention!rates,!can!wow!people!with!glitz!and!glamour!
! Social!Media!
• Networking!with!friends!
• Sharing!experiences!with!friends!
• Cost!effective!communications!
• Online!shopping!
− Target!of!marketing!efforts:!customer/consumer!
− Satisfying!customers!is!the!key!to!any!organization’s!success!!
!
We!need!to!see!ourselves!as!our!own!personal!brand!
− PROMOTE!yourself!
− Power!of!the!brand!− Ex:!Kevin!Durant!
o New!$350!million!contract!deal!with!Nike!
o The!power!of!his!brand!and!his!character!is!so!great!that!they!will!throw!down!$350!MILLION!to!claim!
him!
− Ex:!THE!University!of!Texas!at!Austin!deal!with!Longhorn!Network!
o Basically,!we!are!the!fucking!shit!and!have!such!a!strong!brand!that!we!can!get!more!money!
− Ex:!Apple!knows!that!they!have!to!make!the!iPhone!6!BIG!
o They!have!to!give!value!to!their!customers!
!
AMA!Definition!of!Marketing!
− Marketing!is!the!activity,!set!of!institutions,!and!processes!for!creating,!communicating,!delivering,!and!
exchanging!offerings!that!have!value!for!customers,!clients,!partners,!and!society!at!large.!
− “So!tell!me!quick!and!tell!me!true!–!
Or!else,!my!friend,!to!heck!with!you!–!
Less!how!this!product!came!to!be!–!
More!what!the!darn!thing!does!for!me!”!
− everybody!markets!
− Note:!This!is!the!new!definition!of!Marketing!from!the!AMA!as!of!October!25,!2007.!!
!
MARKETING!
− Entails!processes!that!focus!on!delivering!value!and!benefits!to!customers,!not!just!selling!goods!and!services!
o What!you’re!doing!is!offering!value!!!
! KD!offers!value!to!a!team!
− When!an!organization!creates!a!high!level!of!employee!satisfaction,!this!leads!to!greater!effort,!which!leads!
to!higher!quality,!and!so!on…!!
− For!example,!The!Home!Depot!believes!that!its!employees!are!its!biggest!competitive!advantage.!“Taking!
care!of!our!people”!is!listed!as!the!first!value!on!the!company!Web!site.!
!
Marketing!situation!is!the!process!of!exchange!(conditions!below)!− Involves!two!parties!
− Both!have!something!of!value!to!exchange!
− Communication!and!Delivery!
− Freedom!to!Accept!or!Reject!
− Desire!to!Deal!with!Other!Party!
!
− Long!term,!mutually!rewarding!relationship!
− You!give!up!something!(money)!in!order!receive!something!that!you!want!(product)!
!
Marketing—what’s!it!all!about?!
− More!than!selling!or!advertising!
− Summary*Overview!o Many!people!are!surprised!when!they!realize!how!many!different!ideas!and!activities!are!included!in!
the!term!“marketing.”!
− Key*Issues!o *Most!people!think!that!marketing!involves!selling!and!advertising.!!
o " *Think!about!a!manufacturer!of!bicycles:!!
! !many!brand!names;!
! !many!different!bicycles;!
! !many!types!of!bicycles!with!various!features;!
! !prices!range!from!low!to!very!high.!
!
− (ex)!Things!a!firm!should!do!in!Producing!a!Bike!
o Analyze!Needs!
! Who!is!going!to!buy!the!bike!
o Predict!Wants!
! Who!really!wants!a!new!bike?!Find!the!target!
o Estimate!Demand!
! Related!to!production!
o Determine!Where!
! Where!is!it!going!to!be!sold!and!how!(online,!in!person,!which!stores)!
! Need!to!give!products!to!consumers!exactly!where!they!want!it!
o Estimate!Price!
! Price!is!determining!factor!
o Decide!Promotion!
! How!are!you!going!to!promote!it?!
! Are!you!going!to!let!the!media!handle!it?!
o Estimate!Competition!
! Who!is!going!to!compete?!
! When!is!our!new!product!not!going!to!be!the!best!on!the!market!anymore?!
o Provide!Service!
o Summary*Overview!! By!focusing!on!the!many!tasks!involved!in!producing!a!bicycle,!it!is!possible!to!get!a!feel!for!
the!wider!range!of!marketing!activities.!
o Key*Issues!o Among!the!different!things!a!manager!must!do!in!producing!a!bicycle,!he/she!must:!
! Analyze*the*needs!of!people!for!various!models!of!bicycles;!
! Predict!the!types!of!bicycles!consumers!will!want!and!decide!which!consumers!to!satisfy;!
! Estimate!the!number!of!bicycle!riders!and!how!many!bicycles!they!might!buy;!
! Determine!where!the!consumers!will!be!and!how!to!get!bicycles!to!them;!
! Estimate!the!price!consumers!are!willing!to!pay!for!a!bicycle,!and!if!that!price!will!result!in!a!
profit!for!the!firm;!
! Decide!what!kinds!of!promotion!should!be!used!to!inform!consumers!about!the!firm!and!its!
bicycles;!
! Estimate!the!impact!of!competition!from!other!bicycle!producers;!
! Determine!how!to!provide!customer!service!if!a!customer!has!a!problem!!after!purchasing!a!
bike.!
!
Production!vs.!Marketing!
− Marketing!
o Makes!sure!right!goods!and!services!are!produced!
− Production!
o Making!goods!
o Performing!services!
− CREATES!CUSTOMER!SATISFACTION!
− Summary*Overview!o Production!and!marketing!are!both!fundamental!economic!activities.!However,!some!people!
misunderstand!the!relationship!between!them.!Thus,!it!helps!to!have!a!clear!picture!of!how!
production!and!marketing!interact!with!each!other.!
− Key*Issues!o Production!involves:!making!goods!or!performing!services.!!
o Products!do!not!sell!themselves!!
! " !Marketing:*!• Makes!sure!that!the!right!goods!and!services!are!produced;!
• Creates!customer!satisfaction:!the!extent!to!which!an!organization!fulfills!a!
customer’s!needs,!desires,!and!expectations.!
!
The!Four!Marketing!Management!Philosophies!
− Production:!internal!capabilities!of!the!firm!
o Field!of!Dreams!Orientation!
! “If!you!build!it,!they!will!come”!
! doesn’t!consider!if!what!s!produced!meets!market!needs!
o Henry!Ford’s!Model!T!availability!in!any!color!as!long!as!it!was!black!
− Sales:!aggressive!sales!techniques!and!belief!that!high!sales!result!in!high!profits!o Having!a!really!successful!sales!person!
o Someone!who!could!sell!ice!to!an!eskimo!
o Marketing!=!selling!things!and!collecting!money!
! Disregards!market!needs!and!consumer!demand!
! Despite!the!quality!of!sales!force,!often!cannot!convince!people!to!buy!what!is!neither!
wanted!nor!needed!!
o Dot.com!businesses!in!the!late!1990s!
− Market:!satisfying!customer!needs!and!wants!while!meeting!objectives!
o Meeting!own!objectives!(make!money)!by!meeting!their!objectives!
o Marketing!concept!
! Focusing!on!customer!wants!and!needs!to!distinguish!products!from!competitors’!offerings!
! Integrating!all!the!organizations!activities!to!satisfy!these!wants!
! Achieving!the!organization’s!longkterm!goals!by!satisfying!customer!wants!and!needs!legally!
and!responsibly!
o Achieving!a!Marketing!Orientation!
! Obtain!information!about!customers,!competitors,!and!markets!
! Examine!the!information!from!a!total!business!perspective!
! Determine!how!to!deliver!superior!customer!value!
! Implement!actions!to!provide!value!to!customers!
o Ritz!Carlton!Hotels,!Coach!
o Understanding!your!competitive!arena!and!competitors’!strengths!and!weaknesses!is!a!critical!
component!of!a!market!orientation.!
− Societal:!satisfying!customer!needs!and!wants!while!enhancing!individual!and!societal!wellkbeing!
o An!organization!exists!not!only!to!satisfy!customer!wants!but!also!to!preserve!or!enhance!individuals’!
and!society’s!longkterm!best!interests!
o For!Example:!
! Less!toxic!products!
! More!durable!products!
! Products!with!reusable!or!recyclable!materials!
! The!Body!Shop,!Turtle!Wax,!method!
− Notes!
o Four!competing!philosophies!influence!an!organization’s!marketing!processes.!!!
o Point!out!that!a!firm’s!capabilities,!such!as!production,!are!major!considerations!in!strategic!market!
planning.!!!
o However,!the!guiding!factor!with!all!orientations!should!be!the!determination!of!what!customers!
want,!not!what!management!thinks!should!be!produced!or!sold.!
!
Marketing!is!Important!to!you!
− Important!to!every!consumer!!
− Important!to!your!job!!(and!your!next!job,!too)!
− Affects!innovation!and!standard!of!living!
− Summary*Overview!o Marketing!is!a!pervasive!activity.!It!is!something!that!eventually!touches!everyone,!and!it!
dramatically!affects!peoples’!daily!lives.!The!principles!learned!in!marketing!courses!are!directly!and!
immediately!applicable!to!students’!daily!lives.!
− Key*Issues!o Marketing*is*important*to*every*consumer.!
! !People!bear!the!costs!of!marketing!via!price.!!
! !Everyone!buys!or!uses!a!product!or!service.!!
! !People!shop,!are!exposed!to!advertising,!and!provide!information!to!businesses.!!
o Marketing*is*important*to*your*job.*!! !Selling!your!ideas.!
! !Marketing!offers!career!opportunities.!
! !Organizations!exist!to!satisfy!customers;!marketing!contributes!to!success.!
o Marketing*is*important*to*your*next*job.*!! !People!have!to!market!themselves.!
− Discussion(Question:(How(would(a(knowledge(of(marketing(benefit(an(accountant?(A(computer(system(
designer?(An(attorney?(A(physician?(*!o Marketing*affects*innovation*and*the*standard*of*living.!o Stimulates!research!and!innovation.!
o Creates!new/improved!products.!
o Generates!a!higher!standard!of!living.!!
!
Marketing!Stimulates!new!ideas!
• Summary*Overview!o Marketing!stimulates!research,!new!ideas,!and!new!innovations,!such!as!the!Pringles!100!Calorie!
Pack.!
• Key*Issues!o Creative!marketing!managers!are!always!looking!for!innovative!ideas!for!products!that!really!meet!
customers’!needs.**!o This!ad!for!Pringles!100!Calorie!Pack!highlights!its!new!Calorie!Pack!—!it!offers!the!calorie!conscious!
consumers!the!benefit!of!only!eating!100!calories!for!a!snack!(approximately!8!calories!per!crisp)!
o Marketers!must!look!for!new!ideas!to!stay!ahead!of!competition.!
• Discussion(Question:(Can(you(think(of(other(industries(or(product/service(categories(in(which(marketers(
have(been(particularly(innovative(over(the(past(few(years?*!!
Key!Characteristics!of!Marketing!
− Profit!and!Nonprofit!
− More!than!persuasion!
− Begins!with!Needs!
− Doesn’t!do!it!alone!
− Involves!exchange!
− Builds*relationships!!!
− Summary*Overview!− Managerial!marketing!is!done!by!organizations;!beyond!that!general!definition,!there!are!several!specific!
aspects!of!marketing!that!marketers!should!consider.!
− Key*Issues!− ** Marketing:*!
! applies!to!both!profit!and!nonprofit!organizations;!
! more!than!persuasion.!
− Discussion(Question:(What(are(some(of(the(marketing(activities(other(than(persuasion?*!o begins!with!customer!needs!–!not!the!production!process;!
o does!not!do!it!alone!or!take!the!place!of!other!business!activities;!
o involves!exchanges!–!consumers!exchange!something!of!value!to!acquire!something!of!value;!
o builds!a!relationship!with!the!customer!that!will!lead!to!repeat!purchase.!
!
Customer!Value!Requirements!
− Offer!products!that!perform!
− Earn!trust!
− Avoid!unrealistic!pricing!
− Give!the!buyer!facts!
− Offer!organizationkwide!commitment!in!service!and!afterksales!support!
− Cokcreation!with!customers!
!!
− Notes:!o Customer*Value*is*the!relationship!between!benefits!and!the!sacrifice!necessary!to!obtain!those!
benefits.!
o Customer!value!is!not!simply!a!matter!of!high!quality!or!high!price.!!Instead,!the!customer’s!
perception!of!value!is!the!product/service!quality!they!expect!and!a!price!they!are!willing!to!pay.!!!
o Value!also!includes!customization!and!fast!delivery.!
− Discussion/Team*Activity:!o Discuss!ways!that!successful!companies!deliver!superior!customer!value.!
o Examples:!
! Dell!Computer!Corporation!
! Lexus!
! Mercedes!Benz!
! Amazon.com!
! Southwest!Airlines!
!
Customer!Satisfaction!is…!
− The!customers’!evaluation!of!a!good!or!service!in!terms!of!whether!that!good!or!service!has!met!their!needs!
and!expecations!
!
Universal!Functions!of!Marketing!
− Buying!
− Selling!
− Transporting!
− Storing!!
− Standardization!and!Grading!
− Financing!
− Risk!Taking!
− Market!Information!
!
− Summary*Overview!
o Mass*marketing—offering!a!single!marketing!mix!combination!to!everyone.!
! It!can!be!considered!as!“shotgun!approach.”!
! It!assumes!that!everyone!is!the!same.!
! It!considers!everyone!to!be!a!potential!customer.!
! Mass!marketing!and!mass!marketers!do!not!mean!the!same!thing.!
• Mass!marketers!like!Kraft!Foods!and!Walmart!are!aiming!at!clearly!defined!target!
markets.!
o Their!target!markets!are!large!and!spread!out.!
• Discussion(Question:(Why(are(organizations(moving(in(the(direction(of(target(marketing(as(opposed(to(
mass(marketing?!
o Target*marketing*can*mean*big*markets*and*profits!! Target!marketing!is!not!limited!to!small!market!segments—only!to!fairly!homogeneous!
ones.!
! The!basic!reason!to!focus!on!some!specific!target!customers!is!so!that!you!can!develop!a!
marketing!mix!that!satisfies!those!customers’!specific!needs!better!than!they!are!
satisfied!by!some!other!firm.!
!
What!is!a!Marketing!Plan?!
• Planning!–!the!process!of!anticipating!future!events!and!determining!strategies!to!achieve!organizational!
objectives!in!the!future.!
• Marketing/Planning/–!designing!activities!relating!to!marketing!objectives!and!the!changing!marketing!
environment!
• Marketing/Plan/–!a!written!document!that!acts!as!a!guidebook!of!marketing!activities!for!the!marketing!
manager.!
!!
• GOTTA!have!a!plan!
• Notes:!o Marketing!planning!is!the!basis!for!all!marketing!strategies!and!decisions.!Issues!such!as!product!
lines,!distribution!channels,!marketing!communications,!and!pricing!are!all!delineated!in!the!
marketing!plan.!!
!
Why!write!a!marketing!plan?!
• Provides!a!basis!for!comparison!of!actual!and!expected!performance!
• Provides!clearly!stated!activities!to!work!toward!common!goals!
• Provides!an!examination!of!the!marketing!environment!
• Serves!as!a!reference!for!the!success!of!future!activities!
• Allows!entry!into!the!marketplace!with!awareness!
!
• Notes:!o Writing!a!marketing!plan!allows!the!examination!of!the!marketing!environment!in!conjunction!with!
the!inner!workings!of!the!businesses.!!Once!written!it!serves!as!a!reference!point!for!future!activities,!
and!allows!the!marketing!manager!to!enter!the!marketplace!with!an!awareness!of!problems!and!
opportunities.!
!
Describing!the!Target!Market!
• Marketing*Strategy!involves…!o the!activities!of!selecting!and!describing!one!or!more!target!markets!and!developing!and!maintaining!
a!marketing!mix!that!will!produce!mutually!satisfying!exchanges!with!target!markets.!
• Marketing*Opportunity*Analysis*(MOA)!involves…!o the!description!and!estimation!of!the!size!and!sales!potential!of!market!segments!that!are!of!interest!
to!the!firm!and!the!assessment!of!key!competitors!in!these!market!segments.!
!
Target!Market!Strategy!
• Segment!the!market!based!on!groups!with!similar!characteristics!
• Analyze!the!market!based!on!attractiveness!of!market!segments!
• Select!one!or!more!target!markets!
!
The*Marketing*Mix!is…!• a!unique!blend!of!product,!place!(distribution),!promotion,!and!pricing!strategies!designed!to!produce!
mutually!satisfying!exchanges!with!a!target!market.!
• The!elements!of!the!marketing!mix!are!often!referred!to!as!the!“Four!P’s”!
!
• Notes:!o The!marketing!manager!can!control!each!component!of!the!marketing!mix,!but!the!strategies!for!all!
four!components!must!be!blended!to!achieve!optimal!results.!
• Discussion/Team*Activity:!o The!best!promotion!and!lowest!price!cannot!save!a!poor!product.!Similarly,!excellent!products!with!
poor!placing,!pricing,!or!promotion!will!likely!fail.!Identify!several!firms!that!might!have!used!a!
marketing!mix!in!which!some!components!were!particularly!strong!but!others!were!particularly!
weak.!
!
!
• Summary*Overview*o This!slide!provides!a!description!of!some!important!Federal!regulatory!agencies,!many!of!which!deal!
with!consumer!protection.!!!!
• Key*Issues*• Consumer!protection!is!not!new.!
o Sellers!are!required!to!be!truthful,!meet!contracts,!and!stand!behind!their!products.!
• Food!and!drugs!are!controlled!by!the!Food!and!Drug!Administration!(FDA).!!
o One!major!initiative!of!the!FDA!is!the!development!of!standards!for!nutritional!labeling.!!
• Product!safety!is!also!controlled.!!
o The!Consumer!Product!Safety!Act!of!1972!empowers!its!commission!to!remove!unsafe!products!from!
the!market.!
• State!and!local!laws!may!vary!widely.!!
o For!example,!every!state!has!different!automotive!franchise!legislation!governing!the!retailing!of!new!
vehicles.!!
• Laws!and!enforcement!differ!across!countries:!
o Because!legal!environments!are!closely!tied!to!national!governments,!laws!and!enforcement!vary!
significantly!around!the!world.!!
• Discussion(Question:(What(are(some(areas(of(consumer(protection(that(are(of(current(interest(to(the(courts(
and(to(political(leaders?(
!
Rewards!of!Global!Marketing!
• Having!a!global!vision!means…!
o Recognizing!and!reacting!to!international!marketing!opportunities!
o Using!effective!global!marketing!strategies!
o Being!aware!of!threats!from!foreign!competitors!
!
Importance!of!Global!Marketing!to!the!US!
• Derives!12!percent!of!gross!domestic!product!(GDP)!from!world!trade.!!
• 7!percent!of!U.S.!employment!is!supported!by!exports.!
• U.S.!businesses!export!over!$1.7!trillion!in!goods!and!services!annually.!
• More!smaller!companies!are!aggressively!pursuing!international!markets.!
!!
• Notes:!• The!U.S.!derives!about!12!percent!of!its!GDP!from!world!trade,!with!the!impact!on!the!U.S.!economy!
summarized!on!this!slide.!!France,!Britain,!and!Germany!derive!more!than!19!percent!of!their!GDP!from!
world!trade.!
• About!85!percent!of!all!US!exports!of!manufactured!goods!are!shipped!by!250!companies;!less!than!10!
percent!of!all!manufacturing!businesses!(25,000!companies)!export!goods!on!a!regular!basis.!
• Only!large!multinational!companies!have!serious!attempted!to!compete!worldwide.!!However,!more!smaller!
companies!are!now!pursuing!international!markets.!!!!
!
The!Fear!of!Trade!and!Globalization!
• Millions!of!Americans!have!lost!jobs!
• Millions!fear!losing!jobs!
• Threat!of!outsourcing!if!workers!do!not!accept!pay!cuts!
• Vulnerability!to!operations!moving!offshore!
!
• Notes:!o The!negatives!of!global!trade!are!shown!on!this!slide.!!!
• Discussion/Team*Activity:!o Discuss!examples!of!the!downside!of!globalization.!!!
o Debate!the!ethical!issues!associated!with!foreign!“sweatshops.”!!!
!
Benefits!of!Globalization!
• Expands!economic!freedom!
• Spurs!competition!
• Raises!productivity!and!living!standards!
• Offers!access!to!foreign!capital,!global!export!markets,!and!advanced!technology!
• Promotes!higher!labor!and!…!
• Acts!as!a!check…!
• !!
• Notes:!o Traditional!economic!theory!says!that!globalization!relies!on!competition!to!drive!down!prices!and!
increase!product!and!service!quality.!!Business!goes!to!the!countries!that!operate!most!efficiently!
and/or!have!the!technology!to!produce!what!is!needed.!!!
!
Are!Multinationals!Beneficial?!
• Account!for!19!percent!of!U.S.!private!Jobs!
• Provide!25!percent!of!private!wages!
• 74!percent!of!R&D!spending!
• 48!percent!of!total!exports!
!
External!Environment!Facing!Global!Marketers!
• * Many!of!the!same!external!environmental!factors!that!operate!in!domestic!markets!also!apply!to!global!
markets.!!!
!
• Culture!
o Factors!to!keep!in!mind!when!dealing!with!different!cultures:!
! Language!and!cultural!idioms!
! Customs!and!traditions!
! Values!and!expectations!
!!
o Notes:!! Making!successful!sales!presentations!abroad!requires!a!thorough!understanding!of!the!
country’s!culture.!
• Economic!Development!
o Developed!Country!"!Complex,!sophisticated!industries!
o Less!Developed!Country!"!Basic!Industries!
!
o Notes:!! The!second!factor!in!the!external!environment!is!the!level!of!economic!development!in!
countries!where!a!global!marketer!operates.!!
! In!general,!complex!and!sophisticated!industries!are!found!in!developed!countries,!and!more!
basic!industries!are!found!in!less!developed!nations.!
• Economic!Development:!China!and!India!
o China!and!India!have!two!of!the!highest!growth!rates!in!the!world.!
o They!have!the!world’s!two!largest!populations.!
o Among!highest!levels!of!income!disparity.!
o Great!linguistic!and!cultural!diversity.!
!
o Notes:!! Because!of!their!cultural!diversity,!market!success!in!China!and!India!is!rarely!possible!
without!finely!segmenting!the!local!market!in!each!country.!
! Relations!between!China!and!the!United!States!have!been!strained!recently.!!
• Political!Structure!and!Actions!
o No!private!ownership,!Minimal!individual!freedom!#"!Little!central!government,!Maximum!
personal!freedom!
o Notes:!! The!third!variable!is!political!structure.!!Government!policies!run!the!gamut!from!no!private!
ownership!and!minimal!individual!freedom!to!little!central!government!and!maximum!
personal!freedom.!!As!rights!of!private!property!increase,!governmentkowned!industries!tend!
to!decrease.!!!
! The!least!regulated!and!most!efficient!economies!and!concentrated!among!countries!with!
well!established!commonklaw!traditions,!including!Australia,!Canada,!New!Zealand,!the!
United!Kingdom,!and!the!United!States.!!Others!are!Singapore!and!Hong!Kong.!!!
• Political!and!Legal!Considerations!
! A!generic!market!is!a!market!with!broadly/similar/needs—and/sellers/offering/various,!often/diverse,/ways/of/satisfying/those/needs.!
! A!productkmarket!is!a!market!with!very/similar/needs/and/sellers/offering/various/close/substitute/ways/of/satisfying!those!needs.!
o Broaden!market!definitions!to!find!opportunities!
! Broader!market!definitions—including!both!generic!market!definitions!and!productkmarket!
definitions—can!help!firms!find!opportunities.!
! Too!broad!a!definition!makes!the!company’s!efforts!and!resources!seem!insignificant.!
!
Market!Segmentation!
Market! People!or!organizations!with!needs!or!wants!and!the!ability!
and!willingness!to!buy!
Market!
Segment!
A!subgroup!of!people!or!organizations!sharing!one!or!more!
characteristics!that!cause!them!to!have!similar!product!
needs!
Market!
Segmentation!
The!process!of!dividing!a!market!into!meaningful,!relatively!
similar,!identifiable!segments!or!groups!
!
• Notes:!o Within!a!market,!a!market*segment*is!a!subgroup!of!people!or!organizations!with!one!or!more!
characteristics!that!cause!them!to!have!similar!product!needs.!!!!
o Market*segmentation*is!the!division!of!a!market!into!meaningful,!relatively!similar,!and!identifiable!
segments!or!groups.!
!
The!Concept!of!Market!Segmentation!
• You!can!have…!
o no!market!segments!
o fully!segmented!markets!
o market!segmentation!by!gender!
o market!segmentation!by!age!group!
o market!segmentation!by!gender!AND!age!group!
• Notes:!o This!graphic!illustrates!the!concept!of!market!segmentation,!using!age!and!gender!as!the!bases.!!!
• Discussion/Team*Activity:!o Discuss!other!ways!of!segmenting!the!market!in!addition!to!age!and!gender.!!!
!
The!Importance!of!Market!Segmentation!
• Markets!have!a!variety!of!product!needs!and!preferences!
• Marketers!can!better!define!customer!needs!
• Decision!makers!can!define!objectives!and!allocate!resources!more!accurately!
!!
• Notes:!o Until!the!1960s,!market!segmentation!was!not!used!extensively.!!Consider!CocakCola!with!its!one!
product!aimed!at!the!entire!soft!drink!market.!!Today!over!a!dozen!different!products!are!marketed!
by!the!company!to!different!market!segments.!!!
o Market!segmentation!plays!a!key!role!in!the!marketing!strategy!of!organizations,!leading!to!
competitive!advantage.!The!benefits!are!described!on!this!slide.!!
• Discussion/Team*Activity:!o Discuss!how!CocakCola’s!product!lines!fit!the!needs!of!different!market!segments.!!!
o Name!different!fashion!retailers!and!identify!their!marketing!segmentation!strategies.!!
!
Criteria!for!Segmentation!
Sustainability! Segment!must!be!large!enough!to!warrant!a!special!
marketing!mix.!
Identifiability!and!
Measurability!
Segments!must!be!identifiable!and!their!size!
measurable.!! !
Accessibility! Members!of!targeted!segments!must!be!reachable!with!
marketing!mix.!
Responsiveness! Unless!segment!responds!to!a!marketing!mix!
differently,!no!separate!treatment!is!needed!
!
• Notes:!o Markets!are!segmented!for!three!reasons:!
! 74%!will!pay!attention!to!a!company’s!overall!message!if!it!has!a!deep!commitment!to!a!
cause!
! 1/3!of!US!population!born!between!1979!and!2003!(huge!part!of!the!population)!
o Generation!X!
o Baby!Boomers!
! Spend!$2.1!trillion!a!year,!which!represents!about!half!of!all!of!the!spending!in!the!US!
o The!War!Generation!(ages!61k66)!
o The!Great!Depression!Generation!(ages!67k76)!
o The!G.I.!Generation!(ages!77+)!
o *young!shoppers!spend!more!than!$200!billion,!they!have!the!ear!of!their!parents,!more!tech!savvy!
!
Gender!Segmentation!
• Women!make!70!percent!of!consumers!goods!purchases!annually!
• Many!marketers!of!malekdominated!arenas!are!targeting!women!
• Increasing!numbers!of!marketers!in!female!dominated!categories!are!targeting!men!
!
Income!Segmentation!
• Determines!consumer!wants!
• Determines!buying!power!
• Retailers!can!appeal!to:!
o Lowkincome!(Walmart)!
o Highkincome!(Saks!Fifth!Avenue)!
o Both!(Costco,!Target)!
!
Ethnic!Segmentation!
• Largest!ethnic!markets!are:!
o Hispanic!Americans!
o African!Americans!
o Asian!Americans!
• Companies!must!make!products!geared!toward!specific!ethnic!groups!as!they!continue!to!expand!
!
Family!Life!Cycle!
• VENN!DIAGRAM!OF:!
o Age!
o Marital!Status!
o Children!
!!
• Notes:!o Consumption!patterns!among!people!of!the!same!age!and!gender!differ!because!they!are!in!different!
stages!of!the!family!life!cycle!stage.!!!
o The!FLC!is!a!series!of!stages!determined!by!a!combination!of!age,!marital!status,!and!the!presence!or!
absence!of!children.!!
!
Psychographic!Segmentation!
• Market!segmentation!on!the!basis!of!personality,!motives,!lifestyles,!and!geodemographics!
!
• Notes:!o Demographics!provide!the!skeleton,!but!psychographics!add!meat!to!the!bones.!
!
Personality!and!Motive!Segmentation!
• Personality:!Reflects!a!person’s!traits,!attitudes,!and!habits!• Motives:!Markets!might!appeal!to!emotional,!rational,!or!status!motives,!among!other!
!
• Notes:!o Personality!reflects!a!person’s!traits,!attitudes,!and!habits.!!Consider!the!personality!types!that!
describe!segmented!Porsche!buyers.!!!
o Motives:!!Carmakers!might!appeal!to!customers!with!statuskrelated!motives,!whereas!baby!products!
appeal!to!emotional!motives.!
!
Lifestyle!Segmentation!
• How!time!is!spent!
• Importance!of!things!around!them!
• Beliefs!
• Socioeconomic!characteristics!
!
Demographic!Factors!
• People!are!the!basis!for!any!market!
o Demographic!characteristics!relate!to!buyer!behavior!
o Demographic!cohorts!have!their!own!needs,!values,!and!consumption!patterns!
!
Tweens!
• Prek!and!early!adolescents,!age*8*to*12!• Population!of!20!million!
• Directly!spend!about!$50*billion!annually!• Parents!spend!$150!billion!on!tweens*annually!• View!TV!ads!as!“just!advertising”!
!
Teens!
• Population!of!about!25!million!
• Spend!approximately!72*hours*per*week*tuned!in!electronically!• View!shopping!as!a!social!sport!
• 50!million!teens!around!the!world!are!on!Facebook!
!
Generation!Y!
• Born!between!1979!and!1994!
• Surpassed!population!of!baby*boomers!!• Two!Stages:!1)!Those!born!in!1994!fit!closer!to!the!Teen!cohort.!2)!Those!born!in!1979!have!established!
careers!and!started!families.!
• Purchasing!power!of!$200!billion!annually!!
Generation!X!
• Born!between!1965!and!1978!
• Population!of!40!million!
• Independent,!resilient,!adaptable,!cautious,!and!skeptical!
• 71*percent!have!children!under!age!18!• Home!ownership!is!an!important!goal!
• Avid!buyers!of!!the!latest!clothes,!technology,!and!recreation!products!
!
Baby!Boomers!
• Born!between!1946!and!1964!
• Population!of!75!million!
• Working!longer!to!compensate!for!economic!downturn,!which!affected!retirement!savings!
• The!market!of!services!directed!at!seniors!is!one!of!the!fastest!growing!business!markets!
• $50*billion!a!year!on!grand!kids!!
Growing!Ethnic!Markets!
• Estimated!purchasing!power!of!ethnic!markets!in!2013:!
o Hispanics:!$1.5!trillion!
o African!Americans:!$1.2!trillion!
o Asian!Americans:!$775!billion!
• The!minority!population!of!the!United!States!in!2011!reach!110*million!• 1!in!3!Americans!are!minority!
o in!2003,!1!in!3!were!Hispanic!
!
Marketing!to!Hispanic!Americans!
• The!Hispanic!population’s!diversity!creates!challenges!for!targeting!this!market!
• 12!million!Hispanics!aged!20k34!in!the!United!States!
• 94!percent!of!U.S.!Hispanics!have!home!Internet!access.!
• Highly!responsive!to!new!media:!mobile!marketing!and!social!media!marketing!
!
Marketing!to!African!Americans!
• 47!percent!are!between!18!and!49!years!old!
• More!firms!are!creating!products!for!the!African!American!market.!
• Promotional!dollars!and!media!choices!directed!toward!African!Americans!continue!to!increase.!!
!
Marketing!to!Asian!Americans!
• Younger,!better!educated,!and!have!highest!average!income!of!all!groups!
• Early!adopters!of!latest!digital!gadges!
Final&Consumers&and&Their&Buying&Behavior!&Consumer!Behavior!for!Marketing!Strategy!Planning!
− Summary!Overview!
o The!text’s!comprehensive!model!is!referenced!to!indicate!where!we!are,!and!what!is!
covered!in!the!following!discussion.!
− Key!Issues!
o This!chapter!explores!the!influences!on!final!consumers!and!their!buying!behavior.!!
!
Consumer!Behavior!and!Marketing!Strategy!Planning!(Exhibit!5H1)!
− Marketing!Mixes!&!All!Other!Stimuli!
o Person!making!decisions!
! Economic!Needs!
! Psychological!variables!
! Social!influences!
! Purchase!situation!
! ALL!LEAD!TO!Consumer!Decision!Process!
!!
− Summary&Overview!o Specific!aspects!of!the!customers,!both!final!consumers!and!organizational!customers,!
are!considered!in!Chapters!5!and!6.!
! This&chapter&focuses&on&the&buying&behavior&of&final&consumers&(CB).!− Key&Issues&!
o This&chapter&looks&at&three&key&determinants&of&consumer&behavior:!! (1)!Individual!consumer!factors!including:!economic!needs,!psychological!
variables,!social!influences,!and!the!purchase!situation.!!
! (2)!External!influences!on!consumer!behavior—like!marketing!mixes!and!other!
stimuli.!
! (3)!The!problemHsolving!and!decisionHmaking!processes!consumers!go!through.!
!
Consumer!Decision!Making!Process!
− A!fiveHstep!process!used!by!consumers!when!buying!goods!or!services.!
!!
− Notes:!o The!consumer!decisionHmaking!process!represents!a!general!fiveHstep!process!that!
moves!the!consumer!from!recognition!of!a!need!to!the!evaluation!of!a!purchase!
decision.!!It!is!a!guideline!for!studying!how!consumers!make!decisions.!!!
o Note!that!consumer!decisions!may!not!proceed!in!order!through!all!the!processes,!and!
in!fact,!may!end!at!any!time!without!a!purchase!decision.!!!
!
Consumer!Decision!Making!Process!
− Cultural,!Social,!Individual,!and!psychological!factors!affect!all!steps!
o Need!recognition!
o Information!search!
o Evaluation!of!alternatives!
o Purchase!
o Postpurchase!behavior!
!!
− Notes:!o The!consumer!decisionHmaking!process!is!shown!here!and!described!on!subsequent!
slides.!!!
!
Need!Recognition!
− Result!of!an!imbalance!between!actual!and!desired!states!(present/preferred!state)!
!!
− Notes!
o The!first!state!in!the!decision!making!process!
!
(Beyond!the!Book)!
Consumers!Scale!Back!
− A!Pew!Research!Center!poll!suggests!consumers!are!more!focused!on!basic!necessities.!
− 63!percent!of!women!and!51!percent!of!men!report!!buying!cheaper!brands!and!increased!
shopping!at!discount!stores.!!
− An!increased!number!of!respondents!reported!internet!as!a!necessity,!while!a!decreased!
number!reported!television.!
!
Need!Recognition!
− Internal!Stimuli!
− External!Stimuli!
− Marketing!helps!consumers!recognize!an!imbalance!between!present!status!and!preferred!state!
!!
− Notes:!
o A!marketing!manager’s!objective!is!to!get!consumers!to!recognize!an!imbalance!
between!their!present!status!and!their!preferred!state.!!Advertising!and!sales!promotion!
often!provide!this!stimulus.!!!
− Discussion/Team!Activity!
o List!products!and!services!that!have!been!purchased!recently.!!Indicate!the!types!of!
internal!and/or!external!stimuli!that!influenced!the!decision.!!!
!
Stimulus!
− Any!unit!of!input!affecting!one!or!more!of!the!five!senses!
o Sight!
o Smell!
o Taste!
o Touch!
o Hearing!
!
Recognition!of!Unfulfilled!Wants!
− When!a!current!product!isn’t!performing!properly!
− When!the!consumer!is!running!out!of!a!product!
− When!another!product!seems!superior!to!the!one!currently!used!
!!
− Notes:!o Marketers!create!new!products!and!services!by!observing!trends!in!the!marketplace,!
and!can!create!wants!on!the!part!of!the!consumer.!!!
o Consumers!recognize!unfilled!wants!in!various!ways,!in!particular,!in!the!ways!shown!on!
this!slide.!!!
!
Information!Search!
− Internal(Information(Search!o Recall!information!in!memory!
− External(Information(search!o Seek!information!in!outside!environment!
! Nonmarketing!controlled!
! Marketing!controlled!
!!
− Notes:!o An!internal!information!search!is!the!process!of!recalling!information!in!memory.!!This!
includes!prior!experience!or!prior!knowledge!about!a!product.!!!
o An!external!information!search!relies!on!information!in!the!outside!environment.!!This!
includes!personal!and!public!references,!advertisements,!and!publicity.!!!
o External!information!may!be!obtained!from!nonHmarketing!controlled!sources!and/or!
marketing!controlled!sources.!!Nonmarketing!controlled!sources!include!personal!
experience,!personal!sources,!and!public!sources!such!as!Underwriters!Laboratories.!!
MarketingHcontrolled!information!is!biased!toward!a!specific!product!because!it!
originates!with!marketers!promoting!that!product.!!These!sources!include!massHmedia!
advertising,!sales!promotion,!salespeople,!product!labels!and!packaging,!and!the!
Internet.!!!
!
Evoked!Set!
− Group!of!brands,!resulting!from!an!information!search,!from!which!a!buyer!can!choose!
!!
− Notes:!o The!information!search!should!yield!a!group!of!brands,!or!evoked!set,!which!are!the!
consumer’s!preferred!alternatives.!!From!this!set,!consumers!will!further!evaluate!the!
alternatives!and!make!a!choice.!!!
o Discussion/Team!Activity:!
o Describe!the!evoked!set!derived!from!information!searches!previously!conducted.!!What!
were!the!characteristics!that!made!these!products!the!preferred!alternatives?!
!
Evaluation!of!Alternatives!and!Purchase!
− Analyze!product!attributes!
− Use!cutoff!criteria!
− Rank!attributes!by!importance!
!!
− Notes:!o Once!the!evoked!set!is!constructed,!the!consumer!is!ready!to!make!a!decision.!!!
o One!way!to!make!a!choice!is!to!pick!product!attributes!that!are!important!to!him/her,!
then!exclude!all!products!in!the!set!that!do!not!have!that!attribute.!!!
o Another!way!to!narrow!the!number!of!choices!is!to!use!cutoffs,!or!minimum!or!
maximum!levels!of!an!attribute!that!an!alternative!must!have.!!Many!times,!price!is!an!
important!cutoff!attribute.!!!
o The!goal!of!the!marketing!manager!is!to!determine!which!attributes!have!the!most!
influence!on!a!consumer’s!choice,!and!design!a!marketing!mix!that!stresses!those!
attributes!to!the!consumer.!!!
o A!single!attribute,!such!as!price,!may!not!always!explain!a!consumer’s!evaluation!of!
products.!!Attributes!that!the!marketer!may!consider!important!are!not!always!
important!to!the!consumer.!!!
o Brand!names,!such!as!Johnson!&!Johnson,!have!a!significant!impact!over!the!choice!of!
products.!!!
!
Purchase!
− To!buy!or!not!to!buy…!
o Marketing!determines!which!attributes!are!most!important!in!influencing!a!consumer’s!
choice!
!!
− Notes:!o Following!the!evaluation!of!alternatives,!the!consumer!decides!which!product!to!buy!or!
decides!not!to!buy!at!all.!!!
o Ultimately,!the!consumer!must!specifically!decide:!
o Whether!to!buy!
o When!to!buy!
o What!to!buy!(product!type!and!brand)!
o Where!to!buy!(type!of!retailer,!specific!retailer,!online!or!in!store)!
o How!to!pay!
!
Cognitive!Dissonance!
− Inner!tension!that!a!consumer!experiences!after!recognizing!an!inconsistency!between!behavior!
and!values!or!opinions.!
!!
− Notes:!o Once!a!purchase!decision!is!made,!the!next!step!in!the!process!is!the!evaluation!of!the!
product!after!purchase.!!Consumers!expect!certain!outcomes!from!the!purchase,!and!
how!well!these!expectations!are!met!determines!the!level!of!customer!satisfaction.!!!
o Price!influences!the!level!of!expectations!for!a!product!or!service.!
o When!people!feel!inconsistency!between!their!values!or!opinions!and!their!behavior,!
they!feel!an!inner!tension!called!cognitive!dissonance.!!In!purchase!decisions,!this!is!also!
called!“buyer’s&remorse.”!Marketers!try!to!reduce!any!lingering!doubt.!=!
o For!example:!Why!do!people!who!have!been!repeatedly!warned!that!cigarettes!are!bad!
for!their!health!continue!to!smoke?!Because!smokers!"know"!one!thing!and!"feel"!
another—that's!cognitive!dissonance!at!work.!!
Postpurchase!Behavior!
− Consumers(can(reduce(dissonance(by:!o Seeking!information!that!reinforces!positive!ideas!about!the!purchase!
o Avoiding!information!that!contradicts!the!purchase!decision!
o Revoking!the!original!decision!by!returning!!!the!product!
− Marketing(can(minimize(dissonance(through(effective(communication(with(purchasers.!!!
− Notes:!o Marketing!managers!can!help!reduce!cognitive!dissonance!through!effective!
communication!with!consumers,!such!as!followHup!notes,!advertising,!and!guarantees.!
− Discussion/Team!Activity:!
o Discuss!any!of!your!purchases!that!generated!cognitive!dissonance!and!what!was!done!
to!address!the!situation.!!What!role,!if!any,!did!marketing!play!in!minimizing!cognitive!
dissonance?!!What!was!the!outcome?!!Discuss!ways!in!which!the!provider!of!the!
products/services!might!have!reduced!this!inner!tension.!!
!
!
FROM!BOOK!NOTES!
− Economic!Needs!Affect!Most!Buying!Decisions!
o Economic!buyers!seek!the!best!uses!of!time!and!money!
! Economic&buyers"!people!who!know!all!the!facts!and!logically!compare!
choices!to!get!the!greatest!satisfaction!from!spending!their!time!and!money!
• Most!economists!assume!that!consumers!are!economic!buyers!
! Economic&needs"!needs!concerned!with!making!the!best!use!of!a!consumer’s!
time!and!money!
• Economic!needs!differ!for!each!consumer!
o Economy!of!purchase!or!use!
o Efficiency!in!operation!or!use!
o Dependability!in!use!
o Improvement!of!earnings!
o Convenience!!
! Marketing!managers!must!find!new!ways!to!appeal!to!economic!needs!
• Consumers!appreciate!improved!economic!value!!
• Many!firms!adjust!marketing!mixes!for!target!markets!that!place!a!high!
value!on!convenience!!
o Economic!conditions!affect!consumer!and!confidence!spending!
! Prospering!economy!
• Consumers!feel!confident!and!secure!in!their!jobs!
• Consumers!are!more!likely!to!borrow!money!
• Consumers!are!more!likely!to!make!extravagant!purchases!
! Economic!recession!
• Consumers!worry!about!job!prospects!
• Consumers!are!more!careful!with!spending!
Psychological!Influences!within!an!Individual!
− Needs!
− Wants!
− Drives!
− Consumers!seek!benefits!to!match!needs!and!wants!
!!
− Summary&Overview!o Marketers!who!follow!the!marketing!concept!are!concerned!with!satisfying!the!needs!of!
consumers,!but!what!exactly!are!needs,!and!what!types!of!needs!are!there?!
− Key&Issues!o Needs:!basic!forces!that!motivate!consumers!to!do!something.!
o Wants:!learned!needs;!that!is,!they!are!needs!expressed!as!a!desire!for!a!particular!
needHsatisfier.!
− Discussion(Question:(What(are(some(of(the(possible(underlying(needs(and(wants(for(a.)(deodorant;(b.)(a(television;(c.)(a(tax(preparation(service?!
o Drive:!a!strong!internal!stimulus!that!encourages!action!to!reduce!a!need.!!
o !Consumers!seek!benefits!to!meet!their!needs.!
!
Possible!needs!motivating!a!person!to!some!action!
!
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!
The!PSSP!Hierarchy!of!Needs!
− Personal!Needs!
− Social!needs!
− Safety!Needs!
− Physiological!Needs!
!!
− Summary&Overview!o Many!different!levels!of!needs!can!appeal!to!or!motivate!a!person.!!The!PSSP!pyramid!
shown!here!helps!apply!motivation!theory!to!the!particular!needs!of!consumers!and!
marketing!managers!trying!to!develop!marketing!mixes!to!meet!those!needs.!
− Key&Issues!o Physiological!needs:!the!most!basic!needs!people!experience.!!
! Examples:!biological!needs!for!food,!liquid,!rest,!and!sex.!
o Safety!needs:!concerned!with!protection!and!physical!wellHbeing.!
! Examples:!health,!medicine,!exercise,!and!security.!
o Social!needs:!derived!from!a!person’s!interactions!with!others.!
! Examples:!love,!friendship,!status,!esteem,!and!connecting!with!others.!
o Personal!needs:!concerned!with!an!individual’s!need!for!personal!satisfaction,!unrelated!
to!what!others!do.!!!
! Examples:!personal!satisfaction,!accomplishment,!fun,!freedom,!and!relaxation.!
− Discussion(Question:(Can(you(provide(an(example(of(products(or(services(whose(marketing(mixes(attempt(to(fulfill(the(four(types(of(needs?(!
− NOTE:(Some(products(may(try(to(satisfy(only(one(type(of(need,(while(others(may(attempt(to(satisfy(more(than(one(type.!
!
Dannon!
− Going!after!the!safety!need!of!well!being!!
!
Perception!determines!what!consumers!see!and!feel!
− Selective!exposure!
− Selective!perception!
− Selective!retention!
!!
− Summary&Overview!o Perception!refers!to!how!people!gather!and!interpret!information!from!the!world!
around!them.!Marketers!are!very!much!interested!in!the!processes!people!use!to!handle!
incoming!marketing!mix!stimuli,!because!people!can’t!process!all!the!information!to!
which!they!are!exposed!on!a!daily!basis.!The!volume!is!too!great.!
− Key&Issues!o Selective!exposure!means!that!consumers!seek&out&and¬ice&only&the&information&
that&interests&them.!
o Selective!perception!means!that!people!screen&out&or&modify&ideas,!messages,!and!
information!that!conflict!with!previously!learned!attitudes!and!beliefs.!
o Selective!retention!means!that!consumers&remember&only&what&they&really&want!to!remember.!
− Discussion(Question:(When(you(read(a(newspaper,(do(you:(a.)(start(on(page(1(and(read(every(article(and(ad,(in(order,(until(you(finish(at(the(last(page;(or(do(you:(b.)(skip(around,(reading(some(things(and(not(others?(Option(b.)(is(more(typical—is(that(selective(exposure,(perception,(or(retention?!
o If(you(read(an(advertisement(for(a(product(that(you(have(used(before,(do(you:(a.)(accept(the(ad(at(face(value;(or(b.)(evaluate(it—perhaps(even(dismiss(it—in(reference(to(your(past(experience?(Option(b.)(is(more(typical—is(that(selective(exposure,(perception,(or(retention?!
o (Do(you(remember:(a.)(the(details(of(any(product(or(service(you(have(ever(used;(or(b.)(remember(some(and(not(others—particularly(the(ones(with(which(your(experiences(were(really(bad(or(really(good?(Option(b.)(is(more(typical—is(that(selective(exposure,(perception,(or(retention?!
!
The!Learning!Process!
− Drive!
− Cues!
− #(reinforcement)!Response!
!!
− Summary&Overview!o Marketers!understand!that!virtually!all!of!consumer!behavior!is!learned,!so!they!are!
very!interested!in!how!they!can!positively!affect!the!learning!process.!
− Key!Issues!
o Learning!is!a!change!in!a!person’s!thought!processes!caused!by!prior!experience.!!
! As!mentioned!previously,!a!drive!is!a!strong!internal!stimulus!that!encourages!
action!to!reduce!a!need.!!
o Cues!are!stimuli!in!the!environment!that!trigger!a!drive!or!response.!!
o A!response!is!an!effort!to!satisfy!a!drive.!!
o Reinforcement!occurs!when!the!response!is!followed!by!satisfaction,!which!reduces!the!
drive.!!
− Discussion(Question:(On(major(highways,(there(are(often(billboards(containing(nothing(more(than(the(name(or(logo(of(a(restaurant(and(a(statement(such(as,(“Exit(32—10(miles.”(What(is(happening(here(in(terms(of(cues,(drives,(response,(and(reinforcement?!
o Marketers!often!try!to!identify!positive!cues!or!images!that!have!positive!associations!
from!some!other!situation!and!relate!them!to!their!marketing!mix.!
o Many!needs!are!culturally!learned.!!
!
Psychographics!focus!on!Activities,!interest,!and!opinions!
− Summary&Overview!o Personality!and!lifestyles!are!other!psychological!variables!that!affect!consumer!
behavior.!!
− Key&Issues!o Personality&affects&how&people&see&things.&!
! Marketers!have!found!it!difficult!to!incorporate!personality!into!the!marketing!
mix.!
o Psychographics&or&lifestyle&analysis:!! Activities:!identify!what!people!do—objectively!observable.!
! Interests:!tend!to!create!stronger!drives!that!may!pinpoint!market!
opportunities.!
! Opinions:!the!ways!in!which!people!feel!about!things.!!
o By&combining&opinions&with&interests&and&activities,&marketers&can&develop&a&robust&view&of&certain&target&market&segments.!
− Discussion(Question:(It(is(often(said(that(lifestyle(analysis(paints(a(more(“human”(picture(of(the(target(consumer(than(does(a(simple(demographic(description.(Why(would(this(be(the(case?(!
!
FROM!BOOK!NOTES!
− Psychological!Influences!Within!an!Individual!!
o Needs!motivate!consumers!
! Needs"!basic!forces!that!motivate!a!person!to!do!something!
• Involve!a!person’s!physical!wellHbeing!
• Ex.!water,!food,!shelter!
! Wants"!“needs”!that!are!learned!during!a!person’s!life!
! Drive"!a!strong!stimulus!that!encourages!action!to!reduce!a!need!
• Internal"!the!reason!behind!certain!behavior!patterns!
• Product!purchases!result!from!a!drive!to!satisfy!some!need!
! Good!marketing!managers!study!what!consumers’!needs,!wants,!and!drives!
exist!and!how!they!can!be!satisfied!better!!!
o Consumers!seek!benefits!to!meet!needs!
! Thinking!about!needs!can!help!you!see!what!benefits!a!consumer!might!seek!
from!a!marketing!mix!
o Several!needs!at!the!same!time!
! Physiological&needs&• Biological!needs!(food,!liquid,!rest,!sex)!
! Safety&needs&• Needs!concerned!with!protection!and!physical!wellHbeing!
• Health,!financial!security,!medicine,!exercise!
• Marketers!that!offer(solutions!to!safety!needs!build!brand!loyalty!! Social&needs&
• Needs!concerned!with!love,!friendship,!status!and!esteem!
• Marketers!that!help!people!connect(with!others!inspire!positive!feels!about!their!own!brands!
! Personal&needs&• Concerned!with!an!individual’s!need!for!personal!satisfaction!
• Unrelated!to!what!other!think!or!do!!
o Perception!determines!what!consumers!see!and!feel!
! Perception"!how!we!gather!and!interpret!information!from!the!world!around!
us!
! We!are!constantly!bombarded!by!stimuli!but!we!may!not!see!or!hear!anything!
• Selective&exposure"!we!seek!out!information!that!interests!us!
• Selective&perception"!we!screen!out!or!modify!ideas!and!messages!
that!conflict!with!out!attitudes!and!beliefs!
• Selective&retention"!we!remember!only!what!we!want!to!remember!
! Our!needs!affect!these!selective!processes!!
• Current!needs!receive!more!attention!
o Learning!determines!what!response!is!likely!!
! Learning"!a!change!in!a!person’s!thought!processes!caused!by!prior!experience!!
• Can!be!direct!or!indirect!
• May!result!from!things!marketers!do!
• May!result!from!stimuli!that!have!nothing!to!do!with!marketing!
• Almost!all!consumer!behavior!is!learned!
! Steps!in!the!learning!process!
• Cues!o Products,!signs,!ads,!and!other!stimuli!in!the!environment!
o Determines!the!response!to!a!drive!
• Response!o An!effort!to!satisfy!a!drive!
o Depends!on!cue!and!the!person’s!past!experience!
• Reinforcement!o Occurs!when!response!is!followed!by!satisfaction!
o Strengthens!the!relationship!between!the!cue!and!the!response!!
o Repeated!reinforcement!leads!to!habit!
o Many!needs!are!culturally!learned!
! Need!for!food!leads!to!culturally!specific!food!wants!
! Critics!argue!that!marketing!efforts!encourage!people!to!spend!on!learned!
wants!unrelated!to!a!basic!need!
• Ex.!antiperspirant!
o Attitudes!relate!to!buying!
! Attitude"!a!person’s!point!of!view!toward!something!
• Affect!selective!processes,!learning,!and!buying!decisions!!!
• Involve!liking!or!disliking!something"!has!action!implication!
• Not!necessarily!a!predictor!of!intentions!to!buy!
! Belief"!a!person’s!opinion!about!something!
• Help!shape!a!consumer’s!attitude!but!don’t!necessarily!involve!any!
liking!or!disliking!!
• May!have!a!positive!or!negative!effect!in!shaping!consumers’!attitudes!!
o “Green”!attitudes!and!beliefs!change!marketing!mixes!
! Marketing!managers!develop!marketing!mixes!to!address!ecological!interests!
! Unclear!how!these!changes!will!affect!consumer!attitudes!
• Some!experts!think!“green”!claims!will!confuse!the!consumer!
o Most!marketers!work!with!existing!attitudes!
! Consumers!attitudes!are!enduring!
• More!economical!to!work!with!current!attitudes!than!to!try!to!change!
them!
• Changing!negative!attitudes!is!the!most!difficult!job!a!marketer!faces!
o Ethical!issues!may!arise!
! Ethical!issues!arise!when!consumers!have!inaccurate(beliefs!! Marketers!must!be!careful!about!promotion!that!might!encourage!false!beliefs!
o Meeting!expectations!is!important!!
! Expectation"!an!outcome!or!event!that!a!person!anticipates!or!looks!forward!
to!
! Often!focus!on!benefits!or!value!a!consumer!expects!from!a!marketing!mix!
• Consumer!is!dissatisfied!when!expectations!are!not!met!
o Building!consumer!trust!builds!sales!
! Trust"!the!confidence!a!person!has!in!the!promises!or!actions!of!another!
person,!brand,!or!company!
• Drives!expectations!
! Highly!trusted!people,!brands,!and!companies!have!a!marketing!advantage!!
• Consumers!buy!from!and!are!more!loyal!to!brands!they!trust!!
o Psychographics!focus!on!activities,!interests,!and!opinions!
! Psychographics&or!lifestyle&analysis"!the!analysis!of!a!person’s!dayHtoHday!
pattern!of!living!as!expressed!in!that!person’s!AIOs!
! Understanding!psychographics!is!helpful!in!providing!ideas!for!advertising!
themes!
Lifestyle!dimensions!(and!some!related!demographic!dimensions)!
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FROM!BOOK!NOTES!
− Social!Influences!Affect!Consumer!Behavior!!
o Who!is!the!real!decision!maker!in!family!purchases?!
! SexHrole!stereotypes!have!changed!and!weekend!purchases!are!more!
common"!men!and!children!take!more!responsibility!for!purchase!decisions!!
! Buying!responsibility!and!influence!vary!depending!on!the!product!and!family!!
o Family!considerations!may!overwhelm!personal!ones!
! Many!buying!decisions!are!made!jointly!
! Thinking!only!about!who!actually!buys!the!product!can!misdirect!the!marketing!
strategy!
o Social!class!affects!attitudes,!values,!and!buying!
! Social&class"!a!group!of!people!who!have!approximately!equal!social!position!
as!viewed!by!others!in!the!society!!
• Closely!related!to!occupation!
• Also!influenced!by!education,!community!participation,!where!a!person!
lives,!income,!possessions,!social!skills,!etc.!!
! Income!alone!is!not!a!good!measure!of!social!class!
! Approaches!for!measuring!social!class!groupings!
• Occupation!
• Education!
• Type!and!location!of!housing!!
o Reference!groups!help!people!form!attitudes!!
! Reference&group"!the!people!to!whom!an!individual!looks!when!forming!
attitudes!about!a!particular!topic!
! Strong!influence!on!purchases!related!to!status!!
o Opinion!leaders!influence!buyers!!
! Opinion&leader"!a!person!who!influences!others!!
! Not!necessarily!wealthier!or!better!educated!
! Can!be!opinion!leaders!on!one!topic!and!not!on!another!
! Some!marketing!mixes!aim!specifically!at!opinion!leaders!
• Opinions!affect!others!
• Involved!in!many!productHrelated!discussions!with!“followers”!
• Power!has!increased!with!advent!of!Internet!!
o Culture!surrounds!the!other!influences!
! Culture"!the!whole!set!of!beliefs,!attitudes,!and!ways!of!doing!things!of!a!
reasonably!homogeneous!set!of!people!!
! Failure!to!consider!cultural!differences!can!result!in!problems!!
o Culture!varies!in!international!markets!
! Each!foreign!market!needs!to!be!treated!as!a!separate!market!
! Ignoring!cultural!differences!almost!guarantees!failure!in!international!markets!
FROM!BOOK!NOTES!
− Individual!are!Affected!by!the!Purchase!Situation!
o Purchase!reason!can!vary!!
! Why(a!consumer!makes!a!purchase!can!affect!buying!behavior!
• Ex.!buying!a!pen!for!class!v.!buying!a!pen!for!a!friend!
o Time!affects!what!happens!
! When!consumers!make!a!purchase!and!the!time!they!have!available!for!
shopping!influences!their!behavior!!
! Urgency!of!the!need!is!a!timeHrelated!factor!
o Surroundings!affect!buying!too!
! Different!purchase!situations!may!require!different!marketing!mixes!even!when!
the!same!consumer!is!involved!!
Adoption!Process!Steps!
− Awareness!
− Interest!
− Evaluation!
− Trial!
− Decision!
− *Dissonance!may!set!in!after!the!decision!
− Confirmation!
!!
− Summary!Overview!
o Many!new!product!concepts!require!an!adoption!process.!In!these!situations,!
consumers!may!pass!through!a!series!of!steps!used!to!investigate!and!evaluate,!and!
ultimately!accept!or!reject,!an!idea!or!product!as!a!solution!to!their!problem.!!!
− Key!Issues!
o In!the!awareness!stage,!the!potential!customer!first!learns!about!the!existence!of!a!
product!but!may!lack!more!details.!
o If!the!interest!stage!is!reached,!the!consumer!will!gather!general!information!and!facts!
about!the!product.!
− Discussion(Question:(Would(selective(processes((described(earlier)(have(an(impact(on(whether(or(not(the(consumer(reaches(the(interest(stage?(Explain.(!
o !In!evaluation,!the!consumer!gives!the!product!a!mental!trial,!applying!it!to!his!or!her!
own!personal!situation.!
o !In!trial,!the!consumer!may!buy!the!product!to!experiment!with!it!in!use.!!!
o The!consumer!ultimately!makes!a!decision—on!either!adoption!and!continued!use,!or!
rejection!of!the!product!from!further!consideration.!
o After!the!decision,!there!is!confirmation.!!Here!the!adopter!continues!to!rethink!the!
decision!and!searches!for!further!support!that!it!was!correct.!
o Dissonance!may!set!in!after!the!decision—tension!caused!by!uncertainty!about!the!
rightness!of!a!decision.!
!
FROM!BOOK!NOTES!
− The!Consumer!Decision!Process!
o Recognizing!a!need!creates!a!problem!for!the!consumer!
! Decision!process!begins!when!a!consumer!recognizes!an!unmet!need!
! ProblemHsolving!process!focuses!on!how!to!best!meet!that!need!!
• Problem!recognition!happens!very!quickly!
o Three!levels!of!problem!solving!are!useful!
! Information!search,!identify!alternative,!set!criteria,!evaluate!alternatives!
! Extensive&problem&solving"!much!effort!goes!into!deciding!how!to!satisfy!a!
need!
• Likely!for!a!new!purchase!or!an!important!purchase!
• Decision!to!buy!–!and!what!to!buy!–!comes!after!extensive!effort!
! Limited&problem&solving"!used!by!consumers!when!some!effort!is!required!in!the!deciding!the!best!way!to!satisfy!a!need!
• Consumer!has!some!previous!experience!with!the!product!but!isn’t!
quite!sure!what!choice!to!make!at!the!moment!
• Deliberate!purchase,!but!only!a!limited!amount!of!effort!is!required!
! Routinized&response&behavior"!used!when!a!consumer!regularly!selects!a!
particular!way!of!satisfying!a!need!when!it!occurs!!
• Consumer!has!considerable!experience!in!how!to!meet!a!specific!need!
and!requires!no!new!information!
• Typical!for!low&involvement&purchases"!purchases!that!have!little!
importance!or!relevance!for!the!customer!!
o Buying!isn’t!always!rational!!
! Consumers!don’t!always!seek!accurate!information!
! Consumers!don’t!always!make!smart!choices!that!provide!the!best!economic!
value!
! Influences!on!consumer!behavior!can!cause!irrational!decisions!!
o Problem!solving!may!not!lead!to!a!purchase!
! Consumer!may!delay!a!purchase!or!not!make!it!at!all!!
o Consumers!can!have!second!thoughts!after!a!purchase!
! Dissonance"!a!feeling!of!uncertainty!about!whether!the!correct!purchase!
decision!was!made!
o PostHpurchase!regret!is!a!bigger!problem!
! Regret!is!not!likely!to!lead!to!the!same!decision!in!the!future!
o Some!consumers!spread!the!word!after!they!buy!
! Consumers!share!opinions!about!both!good!and!bad!experiences!!
! Consumers!are!more!likely!to!share!stories!about!being!dissatisfied!than!
satisfied!
! Many!people!rely!on!the!Internet!for!making!purchase!decisions!!
o New!concepts!require!an!adoption!process!