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!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

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&notice&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!