QUIET BELL WORK 1.Read “The Pet Hotel”, page 36 Answer questions List the 4 Ps, 2 Cs 2.Skim chapter 2, note unfamilar terms 3.Prepare to submit homework

QUIET BELL WORK1. Read “The Pet Hotel”, page 36

• Answer questions• List the 4 Ps, 2 Cs

2. Skim chapter 2, note unfamilar terms3. Prepare to submit homework assignment (article)

BMI3CUnit 2

Slid

e1

THE CONSUMERCHAPTER 2

THE CONSUMERA consumer is the person who uses the product.A customer is the person who buys the product.

• Wouldn’t this be the same person? Some examples when they are not?

BMI3CUnit 2

Slid

e3

THE CONSUMERIn the case of a parent or guardian of a child, the parent is considered a gatekeeper—a person who oversees the care of another.

• Marketers attempt to appeal to the gatekeeper as well as the consumer. Why?

BMI3CUnit 2

Slid

e4

NEEDS AND WANTS

BMI3CUnit 2

Slid

e5

self-actualization/fulfillment

esteem

belonging

safety

physiological

Maslow’s Heirarchy of Needs

NEEDS AND WANTSIn our society, most people do not have difficulty satisfying needs.Wants are items not necessary for survival, but add pleasure and comfort to our lives.

BMI3CUnit 2

Slid

e6

NEEDS AND WANTS

Marketers need to make a clear distinction between needs and wants.

why?BMI3CUnit 2

Slid

e7

NEEDS AND WANTS

In places with poverty, war, or oppression basic needs may not be met. Marketing focuses on meeting needs.

BMI3CUnit 2

Slid

e8

NEEDS AND WANTS

In developed countries, demand is more driven by wants. Marketing presents alternatives, and helps customers set up value equations for each.BMI3CUnit 2

Slid

e9

CONSUMER DEMANDConsumer demand changes based on economic shifts and availability of new products.

BMI3CUnit 2

Slid

e10

economy is stable unemployment down

demand for goods and services UPpeople will buy things they want

economy is in a slump unemployment up

demand for goods & services DOWNpeople will only buy things they need

CONSUMER DEMANDDemand also changes based on wants, needs, or changes in perceived value. Marketers need to make decisions based on:•educated guess, research, historic trends

BMI3CUnit 2

Slid

e11

CONSUMER DEMANDDemand changes as retailers enter/exit the marketplace.•Too many sellers of a product = demand

•As some close, less product available = demand

BMI3CUnit 2

Slid

e12

CONSUMER DEMANDUnderstanding fluctuations in consumer demand is essential to marketing. Because of this, marketers also use product life-cycle models to predict the life of new products.BMI3CUnit 2

Slid

e13

PRODUCT LIFE CYCLES

PRODUCT LIFE CYCLESA PLC shows changes in consumer demand over time.

• no product can be in demand forever• trends, technology and lifestyles change, affect consumer

demand

BMI3CUnit 2

Slid

e15

PRODUCT LIFE CYCLES

The traditional PLC consists of five stages.

BMI3CUnit 2

Slid

e16

Sale

s

Timeintroduction

growth

maturity

decline

decisionpoint

PRODUCT LIFE CYCLES

HomeworkIn your notebook summarize the five steps of the traditional Product Life Cycle.

BMI3CUnit 2

Slid

e17

PRODUCT LIFE CYCLES

Introduction Stage• product is first introduced, “product launch”• initial price is high to help recover costs

• costs include:

• machinery, set-up, training, storage, promotion, packaging, research, etc.

BMI3CUnit 2

Slid

e18

PRODUCT LIFE CYCLES

Introduction Stage• Who buys? Curious people, those who want new things first:

early adopters, or trendsetters

BMI3CUnit 2

Slid

e19

PRODUCT LIFE CYCLES

Introduction Stage• marketing:

• informs the consumer about product• quickly establishes value equation

BMI3CUnit 2

Slid

e20

PRODUCT LIFE CYCLES

Introduction Stage• some businesses arrange consignment deals: allow retailer

to return unsold product after a period of time• some manufacturers pay a shelf allowance for prime shelf

space

BMI3CUnit 2

Slid

e21

PRODUCT LIFE CYCLES

Growth Stage• others start to buy product• reputation spreads• manufacturers advertise heavily

BMI3CUnit 2

Slid

e22

PRODUCT LIFE CYCLES

BMI3CUnit 2

Slid

e23

Growth Stage - starts where costs have been recovered - start making profit

PRODUCT LIFE CYCLES

Growth Stage• the faster a product reaches the growth stage, the sooner it

makes profit• product may be scrapped if unsuccessful

• if it is and it has lost money, it is called a bust

BMI3CUnit 2

Slid

e24

PRODUCT LIFE CYCLES

Growth Stage• first company to enter a market pays the most for R&D and

advertising, but has no competition• as competitors enter, they fight for market share: percentage

of the total market

BMI3CUnit 2

Slid

e25

PRODUCT LIFE CYCLESMarket Share Example

Coca-Cola owns 47% of the market

share (47/100)

BMI3CUnit 2

Slid

e26

Company RevenueCoca Cola $ 47.0 MPepsi Cola $ 46.5 MPC Cola $ 4.5 MMC Cola $ 2.0 M

Total $ 100.0 M

PRODUCT LIFE CYCLES

Growth Stage• factors preventing companies from realizing profit are called

barriers to entry• may include: small market size, cost of R&D, advertising,

equipment...

BMI3CUnit 2

Slid

e27

PRODUCT LIFE CYCLES

Growth Stage• eventually only the most competitive products remain on the

market

How do you compete?

BMI3CUnit 2

Slid

e28

PRODUCT LIFE CYCLES

Growth Stage• a company may produce low-end products to establish

minimum prices and validate expensive products• not sold under a well-known brand name (ie. Panasonic

makes Techniks and Quasar)

BMI3CUnit 2

Slid

e29

PRODUCT LIFE CYCLES

Sale

s

Time

Slid

e30

Maturity StageThe period when sales

start to level off

PRODUCT LIFE CYCLES

Maturity Stage• marketers keep the brand name in front of consumers• success and longevity of the product is highlighted

BMI3CUnit 2

Slid

e31

PRODUCT LIFE CYCLES

Maturity Stage• since major costs have been recuperated and costs are low,

products usually make large profits during this stage• company takes this profit to develop new products

BMI3CUnit 2

Slid

e32

PRODUCT LIFE CYCLES

Maturity Stage

EXAMPLES: • Sony took the money from producing Walkmans and put it into developing Discmans.

• Disney took profits from its amusement parks to launch a cruise ship line. This also expands their brand name into a new market.

BMI3CUnit 2

Slid

e33

PRODUCT LIFE CYCLES

Decline Stage• company cannot find new consumers for their product• profits decrease; marketers try to find the reason for decline• if it is a temporary decline, it may be reversed by a small price

change, or new ad

BMI3CUnit 2

Slid

e34

PRODUCT LIFE CYCLES

Decline Stage• other methods to reverse a decline: redesigning,

reformulating, repackaging• may decide to remove the product from the market altogether

BMI3CUnit 2

Slid

e35

PRODUCT LIFE CYCLES

Decision Point Stage• the final stage of the PLC• marketers must make important decisions regarding a

product’s future

BMI3CUnit 2

Slid

e36

PRODUCT LIFE CYCLES

Decision Point Stage• product may be reformulated, repackaged, and reintroduced• most often maintenance of a product involves new promotion

and new pricing

BMI3CUnit 2

Slid

e37

PRODUCT LIFE CYCLES

Decision Point Stage• if there is little hope for more profit–due to market saturation,

decreased demand, or otherwise–product may be abandoned

BMI3CUnit 2

Slid

e38

TODAY’S AGENDA

•MITRW•Activity sheet•Note•A little friendly competition

BMI3CUnit 2

Slid

e39

NONTRADITIONAL PRODUCT LIFE CYCLES

NONTRADITIONAL PRODUCT LIFE CYCLESIn the textbook, read pages 46 to 49 and make a summary note on Fads, Trends, Niche Markets, and Seasonal Markets. Include in your notes the diagrams on page 46.

Think of additional examples for each type of life cycle.

BMI3CUnit 2

Slid

e41


Fads

BMI3CUnit 2

Slid

e42


FadsA product which is extremely popular for a very brief period of time, and loses popularity just as quickly.

BMI3CUnit 2

Slid

e43

Rubik’s cube, Cabbage Patch Kids, tamagotchi, Pet rock, “whatever”, “yadda yadda”


FadsFads are unpredictable, and high-risk. Companies try to get out of the market just as the fad peaks. If they wait too long, they get stuck with excess inventory.

BMI3CUnit 2

Slid

e44


Trends

BMI3CUnit 2

Slid

e45


TrendsA trend has a more lasting effect on the market than a fad. A trend is usually a movement towards a style of product.

BMI3CUnit 2

Slid

e46

Organic foods, Beanie babies, the Simpsons, cell phones


Niche Markets

BMI3CUnit 2

Slid

e47

Niche MarketsA small section of the market dominated by a small group of products.Short growth, level maturity.

BMI3CUnit 2

Slid

e48

The Pet Hotel, The Cambridge Times, ethnic products



Seasonal Markets

BMI3CUnit 2

Slid

e49


Seasonal MarketsConsumer demand changes and is effected by the weather. Marketers anticipate periods of high and low demand, and work to create off-season opportunities.

BMI3CUnit 2

Slid

e50

Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates

ACTIVITYMy FivesAt your tables, try to identify five specific products which follow each of the non-traditional PLCs. (The ones presented in class do not count!)

PRIZES FOR BEST TABLE!

BMI3CUnit 2

Slid

e51

HOMEWORK1. Page 40

Questions: 1. (b), (c)2. (b), (c)3. (a), (b)

2. Read section 2.2

Work on this quietly until the bell!

BMI3CUnit 2

Slid

e52

BELL WORK1. Read 2.22. Show Mr. M yesterday’s homework

BMI3CUnit 2

Slid

e53

THE CONSUMER MARKET

THE CONSUMER MARKETConsumer Profiles

- the kind of people most likely to be attracted to a specific product

BMI3CUnit 2

Slid

e56

THE CONSUMER MARKET

Consumer Profilescohort: a group that shares common characteristics and buying habits, also called a consumer segment

BMI3CUnit 2

Slid

e57

THE CONSUMER MARKET

Consumer Profilesprimary market: the most likely consumerssecondary market: other, occasional consumers

BMI3CUnit 2

Slid

e58

THE CONSUMER MARKETConsumer Profiles

Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets

BMI3CUnit 2

Slid

e59

PRODUCT CONSUMER PROFILE ADVERTISING

THE CONSUMER MARKET

Demographics- the study of obvious characteristicts that categorize people

- age, gender, family life cycle, income level, ethnicity, culture

BMI3CUnit 2

Slid

e60

THE CONSUMER MARKET

DemographicsAge

• generally broken down into six groups: 0-14, 15-34, 35-50, 51-69, 70-88, 88 and over

• Different researchers use different breakdowns

BMI3CUnit 2

Slid

e61

SIX MAJOR GENERATIONS

BMI3C: www.marketingteacher.com/the-six-living-generations-in-america Unit 2

Slid

e62

Generation Age Characteristics

GI Generation1901-1926

89+ Children of the WWI generation & fighters in WWII & young in the Great Depression

Mature1927- 1945

70 - 88 Radio; Big-Band/Swing music Korean and Vietnam War generation

Baby Boomers1946 - 1964

51 - 69 Rock ‘n Roll; first TV generation; save-the-world

Generation X1965 -1980

35 - 50 latch-key kids

Generation YMillennium Kids1981-2000

15-34 digital literacy as they grew up in a digital environment; 24/7 place; want fast and immediate processing

Generation ZBorn after 2001

Tweens:10 -14 Toddler/Elementary

never known a world without computers and cell phones

http://www.marketingteacher.com/the-six-living-generations-in-america

THE CONSUMER MARKETDemographicsAge

Baby boomers are the most important group to most businesses.... why?

BMI3CUnit 2

Slid

e63

THE CONSUMER MARKET

DemographicsSave ½ a page of space in your notes for a chart summarizing pages 52-53

BMI3CUnit 2

Slid

e64

THE CONSUMER MARKET

DemographicsGender

• Today very few products are marketed exclusively to one gender; gender roles have changed, many products are successfully marketed to both.

BMI3CUnit 2

Slid

e65

THE CONSUMER MARKET

DemographicsFamily Life Cycle

• A business may sell its products to various groups, but it will adjust marketing strategies for each.

BMI3CUnit 2

Slid

e66

THE CONSUMER MARKET

DemographicsSave ½ a page of space in your notes to copy table from page 57

BMI3CUnit 2

Slid

e67

THE CONSUMER MARKET

DemographicsIncome Level

• Businesses use this to determine whom to market to. Upper-income group can/will buy more expensive items.

BMI3CUnit 2

Slid

e68

THE CONSUMER MARKET

DemographicsIncome Level

• Most businesses target customers of average income and compete for customers’ discretionary income.

BMI3CUnit 2

Slid

e69

THE CONSUMER MARKET

DemographicsEthnicity and Culture

• especially important to a company wanting to get involved in international trade; must know what is acceptable by others.

BMI3CUnit 2

Slid

e70

HOMEWORK

1. Copy charts from pages 52-53 and page 57 into your notes in the appropriate spots.

BMI3CUnit 2

Slid

e71

BELL WORK

Read “Info Tech” page 55 answer questions

BMI3CUnit 2

Slid

e72

THE CONSUMER MARKET

Psychographics• a system for measuring consumer’s beliefs, opinions, and

interests• group consumers by religion, taste, lifestyles, attitudes,

personality – psychological factors

BMI3CUnit 2

Slid

e73

THE CONSUMER MARKET

GeographicsMarketers are also interested in where consumers live.

BMI3CUnit 2

Slid

e74

THE CONSUMER MARKET

GeographicsUrban consumer

•live within the boundaries of a city•live in apartments, condos, houses with small yards

•spend on cultural events, restaurants, public transport

BMI3CUnit 2

Slid

e75

THE CONSUMER MARKETGeographicsSuburban consumer

•lives on the outskirts of the city•needs at least one car•spends money on gardens, barbecues, home furnishings

•almost always commutes

BMI3CUnit 2

Slid

e76

THE CONSUMER MARKET

GeographicsRural consumer

•usually need a truck to carry items•often has large parcels of land and needs riding mower, tractor, other farm equipment

BMI3CUnit 2

Slid

e77

THE CONSUMER MARKET

GeographicsBrand Development Index (BDI)

• used to see how well a product is selling in one region in comparison to the total market

BMI3CUnit 2

Slid

e78

THE CONSUMER MARKETGeographicsBrand Development Index (BDI)

If BDI < 1, brand is underdeveloped in this area. If BDI > 1, brand is developed better than average.

BMI3CUnit 2

Slid

e79

per capita sales in region

per capita sales across entire market

= BDI

BRAND DEVELOPMENT INDEX (BDI)

ExampleHostess Potato Chips

Pop. of Canada: 30MSales nationwide: $120MPop. of Cambridge: 100KSales in Cambridge: 350K

BMI3CUnit 2

Slid

e80


Example

A value under 1 means the brand is not fully developed in this area.

BMI3CUnit 2

Slid

e81

350 ÷ 100

120 ÷ 30= = .875

3.5

4

BRAND DEVELOPMENT INDEX (BDI)ExampleHostess Potato Chips

Pop. of Canada: 30MSales nationwide: $120MPop. of Toronto: 4MSales in Toronto: 18M

BMI3CUnit 2

Slid

e82


Example

A value greater than 1 means the brand is fully developed in this area.BMI3CUnit 2

Slid

e83

18 ÷ 4

120 ÷ 30= = 1.125

4.5

4

WARM-UP TASK1. Grab a magazine2. Find an ad3. Identify—in as much

detail as possible—the target market for the advertised item

BMI3CUnit 2

Slid

e84

PRODUCT USE STATISTICS


Groups consumers based on frequency of use:

• heavy user• medium user• light user• non-user

BMI3CUnit 2

Slid

e86

often grouped together


Non-usersGroup #1: those entering the market category for the first time.

BMI3CUnit 2

Slid

e87

PRODUCT USE STATISTICSMarketers try to attract this point-of-entry target by identifying who will enter the market and when, and then promote their brand.

• diapers to expectant parents

BMI3CUnit 2

Slid

e88


Group #2: individuals who do not plan to use products in this category.

BMI3CUnit 2

Slid

e89


Marketers must create a value equation to change consumers’ habits and opinions, and convince consumers to purchase product.

• cell phone industry

BMI3CUnit 2

Slid

e90


TOTAL BENEFITSmust be greater than

TOTAL COSTSto create

VALUEBMI3CUnit 2

Slid

e91

PURCHASE DECISION MAKING PROCESS

PURCHASE DECISION MAKING PROCESSDiscover the need or want.

I’m hungry

BMI3CUnit 2

Slid

e93


Set criteria for what will satisfy your need or want.• quick, no prep work, something to munch on, can eat on

couch

BMI3CUnit 2

Slid

e94

PURCHASE DECISION MAKING PROCESSSearch for products which match your criteria.

popcorn chipsbread carrotsapple peanuts

BMI3CUnit 2

Slid

e95


Make your decision based on your criteria.

popcorn chipsbread carrotsapple peanuts

BMI3CUnit 2

Slid

e96

PURCHASE DECISION MAKING PROCESSPurchase the product.

Go to the kitchen, grab some chips.

BMI3CUnit 2

Slid

e97

Evaluate your purchase decision.

Was I satisfied with my decision?

BMI3CUnit 2

Slid

e98



The process takes longer the more expensive the product because

a) more money → bigger riskb) less experience with more expensive items

BMI3CUnit 2

Slid

e99


Motivation• biological need• emotional need• rational forces• social forces

→ peer pressure→ celebrity endorsements

BMI3CUnit 2

Slid

e10

0


In groups of 2-3, go through the purchase decision making process for an item costing between $200 and $500. Start with a need/want and your solution is to buy one product.Have someone write it out; be prepared to share with class.

BMI3CUnit 2

Slid

e10

1

ASSIGNMENTRead article on page 66-67, answer questions on page 67 in full and complete sentences, hand in before end of class.

Test review:Section 2.1, 2.2., 2.3, 2.4 (not Thorndike or Alderfer), 2.5, handouts, assignments

BMI3CUnit 2

Slid

e10

3

Documents

QUIET BELL WORK 1.Read “The Pet Hotel”, page 36 Answer questions List the 4 Ps, 2 Cs 2.Skim chapter 2, note unfamilar terms 3.Prepare to submit homework