EXAM 2 REVIEW (CH. 5 8)
Marketing Ch. 5
Consumer Markets and Consumer Buyer Behavior
Consumer Buyer Behavior buying behavior of final consumers. CB is all about how we Acquire, Use, and Dispose products.
Consumer Market All the individuals and households that buy or acquire goods and services for personal consumption.
Model of Buyer Behavior
1. The Environment Stimulus, response model. Stimulus → BBB → Response 2. Buyers Black Box (BBB) buyer’s characteristics, and buyer’s decision process. 3. Buyer Responses
Buyer Decision Process
Need Recognition → Information Search → Evaluation of Alternatives → Purchase decision→ Postpurchase behavior. Cognitive decision making model.
1. Need Recognition Stage
● Occurs when a buyer becomes aware of a difference between a desired state and an actual condition.
● Speed of consumer problem recognition can be rapid or slow. Don't forget about the age old question of What are the titles of ada?
● Some consumers are unaware of their problem or needs.
● Internal or External Stimuli
2. Information Search Stage
● Internal Search Buyers search their memories for information about products that might solve their problem
● External Search When an internal search is not sufficient, consumers seek additional information from outside sources
● Personal contacts are often important
● The internet is a major information source.
● Can get external information from 2 places: Marketing control sources or Non Marketing Control sources. Consumers value Marketing control more.
3. Evaluation of Alternatives Stage We also discuss several other topics like 5th generation peach and pecan grower are from where?
● Consideration set (Evoked set): A group of brands within a particular product category that the buyer viewed as alternatives for possible purchases. Evoked or consideration, Retrieval, and Universal.
Dr. Moore as a grad student Valley Brunswick .3 Quality 5 (1.5) 10 (3) .2 Visual Appeal 3 (.6) 8 (1.6) .5 Price (Low) 10 (5) 2 (1)
1st Rate each attributes importance 7.1 5.6 2nd Rate each table on a scale 120 Don't forget about the age old question of Anthropology is the study of what?
4. Purchase Decision Stage
● Choose the product or brand to be purchased
● Selects the seller
● Negotiates the term of the transaction
● Makes the actual purchase or terminates the process
● Situational factors
● Attitudes of others.
5. Post Purchase Evaluation stage
● After purchase, the buyer evaluates the product
● Does its actual performance meet expected levels? If you want to learn more check out What did watson and crick discover in 1953?
● Buyer is either satisfied or dissatisfied.
● Cognitive dissonance: A buyer’s doubts shortly after a purchase about whether the decision was the right one.
● Often occurs after expensive, high involvement purchases.
Three levels of Product Don't forget about the age old question of What are the things that may affect the ecology?
1. Augmented Product Delivery and credit, product support, Warranty, After sale service. 2. Actual product Brand name, quality level, packaging, design, features. 3. Core customer Value
Stages in the Adoption Process
2. Interest Seek information, receptive to learning.
3. Evaluation Consider if trying product makes sense, benefits?
4. Trial Try on a small scale; tests the procut, meet needs? Trial is the quickest route to adoption.
5. Adoption Make full and regular use of the products If you want to learn more check out What is ebdat?
Adopter Categories Based on Relative Time of Adoption of Innovations 1. Innovators 2.5%: Take risk
2. Early adopters 13.5%: Voices have more of an impact on others
3. Early mainstream 34%: Deliberate rarely leaders
4. Late Mainstream 34%: Skeptical
5. Lagging adopters 16%
● Innovation is synonymous with product.
Characters influencing an innovation’s rate of adoption
1. Relative advantage
4. Divisibility (trialability)
5. Communicability (Visibility)
Factors influencing consumer behavior
1. Cultural Culture, subculture, social clues
● Culture Set of basic values, perceptions, wants, and behaviors learned by an individual from family and other important institutions.
● Subculture Group of people with shared value systems based on common life experiences and situations.
● Cross Cultural marketing: Including ethnic themes and cross cultural perspectives within a brand’s mainstream marketing.
● Social class Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. Includes Occupation, income, education, wealth (4 key perspectives of how we define social class).
● Upper Class Two upper classes. Upper uppers (1%) and Lower Uppers (2%). ● Middle class Two middle classes. Upper middles (12%) and middle class (32%). ● Working class (38%)
● Lower class (9%)
2. Social Groups and social networks, family, roles and status
3. Personal Age and life cycle stage, occupation, economic situation, lifestyle, personality and self concept.
4. Psychological Motivation, perception, learning, beliefs and attitudes. Culture stems from
4. Customs Habits, passed down it becomes a tradition.
5. Rituals Rite of passage, but not spiritual.
7. Material artifacts
● Groups Membership groups are ones you belong to. Reference groups are a point of comparison.
● Word of mouth influence
● Opinion leader
● Online social networks Blogs, message boards social media sites.
● Familymost important consumer buying organization in society.
● Roles and status
● Age and life cycle stage
● Economic situation
● Personality and Self concept
● An individual’s pattern of living expressed through activities, interests, and opinions. ● Strongly influences the buying decision process (Products, brand performances, types of media, how and where one shops).
● Perception Select, organize, and interpret information to produce meaning. ● Learning Changes in an individual’s thought process and behavior caused by information and experience.
● Beliefs and attitudes Attitudes: An individual’s enduring evaluation of feelings about and behavioral tendencies toward an object or idea. Can be positive or negative, tend to be stable in the short term. Individuals acquire attitudes through experience and interaction.
The perception process
● Selective exposure An individual selects which inputs, usually relating to strongest needs, will reach awareness
● We cannot be conscious of all inputs at one time
● Selective distortion Changing or twisting received information. Occurs when a person receives information inconsistent with personal feelings or beliefs
● Selective retention Remembering information inputs that support personal feelings and beliefs forgetting inputs that do not.
● Just noticeable Difference (JND)
Subliminal messages Messages or communication that is not obvious.
Maslow’s Hierarchy of Needs
Physiological needs (water, food, shelter), safety (Security, freedom from physical pain), social (Love, affection, sense of belonging), esteem (, and self actualization needs (Self fulfilment)
● Stimulus generalization
1. Cognition Beliefs, knowledge, information. Crest stops cavities
2. Affect Feelings, emotions. I like crest
3. Behavior Intentions. I will buy crest
● Know the model of Consumer behavior
Business buyer behavior
● Buying behavior
● Intended use
● Purchased goods and services are used in the production of other products and services. Business Markets
● Business markets are huge and involve more money and items than consumer markets ● Differ from consumer markets in terms of:
1. Market structure and demand
● Fewer but larger buyers
● Derived demand: Business demand that comes from the demand for consumer goods ● Inelastic demand
2. Nature of the buying unit
● More decision participants
● More professional purchasing effort.
3. Types of decisions and the decisions process.
● More complex buying decisions
● Large sums of money
● Complex technical and economic considerations
● Interactions among people at many levels of the buyer’s organization. Market structure and demand and nature of the buying unit
1. Market structure and demand
● Fewer but larger buyers
● Derived demand: Business demand that comes from the demand for consumer good inelastic shards.
2. Nature of the buying unit
● More decision participants
● More professional purchasing effort.
Any ineffective decision affects consumer.
● Longer and more formalized procedures
● Buyer and seller more dependent on each other
● Supplier development: Systematic development of networks of supplier partners ● To ensure a dependable supply of products and materials.
Types of Buying Situations
● Straight rebuy Buyer routinely reorders something without any modifications ● Modified rebuy Buyer wants to modify product specifications, prices, terms, or suppliers.
● New task Buying situation where the buyer purchases a product or service for the first time.
Participants in buying process
Buying center: All the individuals and units that play a role in the purchase decision making process.
● Actual users of the product or service
● People who make the buying decision
● People and units influencing the buying decision
● People who do the actual buying
● Individuals and units controlling the buying information.
P&G: Competing with itself and winning
● P&G brands compete directly with each other
● Reason for its many brands different people wasn't different sets and benefits ● Strategy in laundry detergent segments
● Identified numerous….
Market segmentation and market targeting (from Ch.2)
Market segmentation Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products.
● Demographic Aggregate population characteristics (Age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, social class). ● Psychographic Demographics provide foundation, psychographics builds the segment. ● Behavioral
Marketers segment their markets using variables such as:
● Social class
● Consumer lifestyles
● Consumer personality
Products people buy reflect their lifestyles.
Values, Attitudes & Lifestyles (VALS)
● Developed by SRI consulting business intelligence
● Occasion segmentation: Segments divide according to occasion
● Benefit Segmentation: Segments divide according to the different benefits that consumers seek from the product.
● User status: Markets can be segmented into nonusers, ex users, potential users, first time users, and regular users.
● Usage rate: Markets can be segmented into light, medium, and heavy users. ● Loyalty status: Consumers can be loyal to brands, stores, and companies. Multiple segmentation bases
Segmentation bases help companies to:
● Helps estimate market demands
Requirements for Effective segmentation
● Measurable, Accessible, Substantial, differentiable, and Actionable.
Market Targeting Strategies
1. Undifferentiated (Mass) Marketing Single marketing mix directed at entire market. Should be a homogeneous market (Customers have similar product needs) 2. Differentiated Targeting two or more segments with a marketing mix for each. Heterogeneous market.
3. Concentrated Targeting a single market segment using one marketing mix. Heterogeneous market.
Evaluating the various segments based on:
1. Segment size/ growth
2. Segment structural attractiveness
3. Company objectives and resources
● Selecting target market segments
● Target markets: Set of buyers sharing common needs or characteristics that the company decides to serve.
Socially responsible target marketing
● Controversy and concern of target marketing
● Vulnerable or disadvantage consumers are targeted with controversial or potentially harmful products.
Choosing a differentiation and Position Strategy
1. Identify a set of differentiating competitive advantages
2. Choosing right competitive advantages
3. Selecting overall position strategy.
Identifying possible value differences and competitive advantage
● Competitive advantage: An advantage over competitors gained by offering greater customer value either by:
1. Having lower prices
2. Providing more benefits that justify higher prices.
● Firms can differentiate in terms of product, services, channels, people, or image. Choosing the right competitive advantages
Number of differences to promote
● Developing a unique selling proposition (USP) for each brand and sticking to it. ● Positioning on more than one differentiator
Criteria of differences to promote
Positioning and Mapping
● Product position: How a product is defined by consumers on important attributes the place a product occupies in consumers’ minds relative to competing products. ● Perceptual map: Created by questioning a sample of consumers about their perception of products, brands, and organizations with respect to two or more dimensions. Developing a Positioning Statement
● Positioning statement: Summarizes company or brand positioning.
● Format: To (target segment and need) our (brand) is (concept) that (point of differences)
● Product Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Includes Goods as well as services, events, persons, places, organizations, and ideas.
Products, Services, and Experiences
● Market offerings Include both tangible goods and services.
● Companies create and manage customer experiences with their brands or companies. ● To differentiate their offers from that of the competitors.
● Know Figure 7.1.
Product and Service Classification
● Consumer products: Bought by final consumers for personal consumption ● Industrial (business) products: Bought by individuals and organizations for further processing or for use in conducting a business.
● Materials and parts (raw and manufactured materials).
● Capital items (aid in production; buildings, fixed equipment)
● Supplies and services (operating suppliers, repair and maintenance).
Table 7.1 Marketing considerations for consumer products
● Know the definitions from this table.
Product and service decisions
● Individual product decisions
● Product Line Decisions
● Product line: Closely related products that either: Have similar functions, are sold to similar customer groups,....
● Product line length Number of items in the product line
● Product line filling (present range), Product line stretching (beyond the range). ● Product Mix decisions Three Key variables: Width, Length, Depth
1. Width Number of different product line the company carries
2. Length Total number of items a company carries within its product lines. 3. Depth Number of versions offered for each product in the line.
● Product mix Set of all product lines and items that a particular seller offers for sale. Figure 7.2 Individual Product decisions
● Product attributes → Branding → Packaging → Labeling → Product support services
● Quality: Dependability and Durability
● Features: Versatility
● Style and Design: Style is “Surface level”
● Design improve usefulness
● Brand: A name, term, design, symbol, or feature that identifies the marketer’s product as distinct from those of other marketers.
● Brand name: The Part of a brand that can be spoken (NIKE).
● Brand Mark: The part of a brand that is not made up of words.
● Trademark: A legal designation of exclusive use of the brand.
Value of Branding
Packaging and Labeling
Packaging The development of a container and a graphic design for a product ● Is vital
● Can influence customers’ attitudes toward a product
● Can influence purchase decisions
Labeling Interrelated with packaging
● Used for identification, promotional, informational, and legal purposes ● Can facilitate the identification of a product by displaying the brand name and a graphic design.
5 Determinations of Service Quality
The CREST Method of Resolving Service Failures
C: Calm the customer
R: Repeat the problem
E: Use empathy statements
S: Solve the problem
T: Make a timely response
Four Service Characteristics
1. Intangibility Services cannot be seen, tasted, felt, heard, or smelled before purchase. 2. Inseparability Services cannot be separated from their providers.
3. Variability Quality of services depends on who provides them and when, where, and how.
4. Perishability Services cannot be stored for later sale or use.
Search qualities Not all products have high search characteristics, where ahead of time you feel good about the purchase of a product.
Brand: A name, term, design, symbol, or other feature that identifies the marketer’s product as distinct from those of other marketers.
Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing.
Positive brand equity Consumers react more favorably to the brand than to an unbranded version of the same product.
Negative Consumers react less favorably to the brand than to an unbranded version. Brand equity
● 4 Key dimensions of brand equity
1. Differentiation What makes the brand stand out.
2. Relevance How consumers feel it meets their needs.
3. Knowledge How much consumers know about the brand.
4. Esteem How highly consumers regard the respected brand.
● Brand valuation is the estimation of the total financial value of a brand. Brand Positioning
● Marketers should establish a mission and vision for the brand when positioning it. ● Position based on: Attributes, benefits, Beliefs and Values (Strongest) Brand name selection
Desirable qualities for a brand name should:
● Be based on the products benefits and qualities
● Be easy to pronounce, recognize, and remember
● Be distinctive and extendable
● Translate easily into foreign languages
● Be capable of registration and legal protection.
Original sandwich cookie.
Major Brand Strategy decisions
1. Brand positioning
● Attributes, benefits, and beliefs and values
2. Brand name selection
● Selection, protection
3. Brand sponsorship
● Manufacturer’s brand, private brand, licensing, and Co branding
4. Brand development
● Line extensions, brand extensions, multi brands, new brands
1. National Brands
● Marketed under the manufacturer’s own name
2. Store brands
● Created and owned by a reseller of a product or service.
● Use names and symbols created by other companies or well known movie characters or celebrities for a fee.
4. Co branding
● Use the established brand name of two different companies on the same product. Brand Development strategies
● Line extension
● Brand extension
● New brands
Developing New Products
● New products enhance a firm’s product mix and add depth to a product line ● There is continuous and discontinuous innovation.
● The term “new product” can have more than one meaning (includes original products, product improvement and modifications, and new brands).
Why new products fail
● No benefits
● Poor match between features and customer decisions
Major strategies in new product development
1. Idea generation
● Search for a new product ideas
● Internal idea sources: Intrapreneurial programs, Internal social networks ● External idea sources:
● Competitors, customers.
● Crowdsourcing: Inviting broad number of people to obtain information ot input into a task.
2. Idea screening
● Screening new product ideas to spot good ones and drop poor ones.
3. Product concept Begin with a product idea, an idea for a possible product that the company can see itself offering.
● Then develop a product concept is a detailed version of the new product idea state din a meaningful consumer terms
● A product image is the way a product is perceived by a consumer.
4. Concept development
● Developing a new product into alternative product concepts
● Find out how attractive each concept is to customers. Choose the best one 5. Concept testing
● Testing a group of target consumers to find out the degree of consumer appeal toward the concepts
● Methods: Presenting the concepts to consumers symbolically or physically or with a word or picture description
● Asking customers about their reactions.
6. Marketing strategy development
● Initial marketing strategy for a new product
● Marketing strategy statement: Describes target market, outlines planned product price, describes planned long run sales, profit goals, and marketing strategy mix. 7. Business Analysis and Product development
● Analysis: Review of the sales, cost, and profit projections
● Development Develop the product concept into a physical product
8. Test Market
● The product and its proposed marketing program are introduced into realistic settings. ● Gives marketer an experience with marketing a product before the introduction. Cost can be high/ time consuming.
● Introducing a new product into the market
● Product life cycle Life cycle a product goes through.