BMI3C Unit 2 Slide 1 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 assignment (article)

THE CONSUMER

BMI3C Unit 2 Slide 3 The Consumer A 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?

BMI3C Unit 2 Slide 4 The Consumer In 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?

BMI3C Unit 2 Slide 5 Needs and Wants self-actualization/fulfillment esteem belonging safety physiological Maslow’s Heirarchy of Needs

BMI3C Unit 2 Slide 6 Needs and Wants In 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.

BMI3C Unit 2 Slide 7 Needs and Wants Marketers need to make a clear distinction between needs and wants. why?

BMI3C Unit 2 Slide 8 Needs and Wants In places with poverty, war, or oppression basic needs may not be met. Marketing focuses on meeting needs.

BMI3C Unit 2 Slide 9 Needs and Wants In developed countries, demand is more driven by wants. Marketing presents alternatives, and helps customers set up value equations for each.

BMI3C Unit 2 Slide 10 Consumer Demand Consumer demand changes based on economic shifts and availability of new products. economy is stableunemployment down demand for goods and services UP people will buy things they want economy is in a slumpunemployment up demand for goods & services DOWN people will only buy things they need

BMI3C Unit 2 Slide 11 Consumer Demand Demand also changes based on wants, needs, or changes in perceived value. Marketers need to make decisions based on: educated guess, research, historic trends

BMI3C Unit 2 Slide 12 Consumer Demand Demand changes as retailers enter/exit the marketplace. Too many sellers of a product =  demand As some close, less product available =  demand

BMI3C Unit 2 Slide 13 Consumer Demand Understanding 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.

BMI3C Unit 2 Slide 14 HOMEWORK 1.Page 40 Questions:1. (b), (c) 2. (b), (c) 3. (a), (b) 2.Read section 2.2 Work on this quietly until the bell!

BMI3C Unit 2 Slide 15 BELL WORK 1.Read Show Mr. M yesterday’s homework

Product Life Cycles

BMI3C Unit 2 Slide 17 Product Life Cycles A PLC shows changes in consumer demand over time. no product can be in demand forever trends, technology and lifestyles change, affect consumer demand

BMI3C Unit 2 Slide 18 Product Life Cycles The traditional PLC consists of five stages. introduction growth maturity decline decision point

BMI3C Unit 2 Slide 19 Product Life Cycles Homework In your notebook summarize the five steps of the traditional Product Life Cycle.

BMI3C Unit 2 Slide 20 Product Life Cycles Introduction Stage product is first introduced, “product launch” initial price is high to help recover costs include: –machinery, set-up, training, storage, promotion, packaging, research, etc.

BMI3C Unit 2 Slide 21 Product Life Cycles Introduction Stage Who buys? Curious people, those who want new things first: early adopters, or trendsetters

BMI3C Unit 2 Slide 22 Product Life Cycles Introduction Stage marketing: informs the consumer about product quickly establishes value equation

BMI3C Unit 2 Slide 23 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

BMI3C Unit 2 Slide 24 Product Life Cycles Growth Stage others start to buy product reputation spreads manufacturers advertise heavily

BMI3C Unit 2 Slide 25 Product Life Cycles Growth Stage starts where costs have been recovered, start making profit

BMI3C Unit 2 Slide 26 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

BMI3C Unit 2 Slide 27 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

BMI3C Unit 2 Slide 28 Product Life Cycles Market Share Example Coca-Cola owns 47% of the market share (47/100) CompanyRevenue Coca Cola$ 47.0 M Pepsi Cola$ 46.5 M PC Cola$ 4.5 M MC Cola$ 2.0 M Total$ M

BMI3C Unit 2 Slide 29 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...

BMI3C Unit 2 Slide 30 Product Life Cycles Growth Stage eventually only the most competitive products remain on the market How do you compete?

BMI3C Unit 2 Slide 31 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)

BMI3C Unit 2 Slide 32 Product Life Cycles Maturity Stage The period when sales start to level off

BMI3C Unit 2 Slide 33 Product Life Cycles Maturity Stage marketers keep the brand name in front of consumers success and longevity of the product is highlighted

BMI3C Unit 2 Slide 34 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

BMI3C Unit 2 Slide 35 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.

BMI3C Unit 2 Slide 36 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

BMI3C Unit 2 Slide 37 Product Life Cycles Decline Stage other methods to reverse a decline: redesigning, reformulating, repackaging may decide to remove the product from the market altogether

BMI3C Unit 2 Slide 38 Product Life Cycles Decision Point Stage the final stage of the PLC marketers must make important decisions regarding a product’s future

BMI3C Unit 2 Slide 39 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

BMI3C Unit 2 Slide 40 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

BMI3C Unit 2 Slide 41 Today’s Agenda MITRW Activity sheet Note A little friendly competition

Nontraditional Product Life Cycles

BMI3C Unit 2 Slide 43 Nontraditional Product Life Cycles In 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.

BMI3C Unit 2 Slide 44 Nontraditional Product Life Cycles Fads

BMI3C Unit 2 Slide 45 Nontraditional Product Life Cycles Fads A product which is extremely popular for a very brief period of time, and loses popularity just as quickly. Rubik’s cube, Cabbage Patch Kids, tamagotchi, Pet rock, “whatever”, “yadda yadda”

BMI3C Unit 2 Slide 46 Nontraditional Product Life Cycles Fads Fads 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.

BMI3C Unit 2 Slide 47 Nontraditional Product Life Cycles Trends

BMI3C Unit 2 Slide 48 Nontraditional Product Life Cycles Trends A trend has a more lasting effect on the market than a fad. A trend is usually a movement towards a style of product. Organic foods, Beanie babies, the Simpsons, cell phones

BMI3C Unit 2 Slide 49 Nontraditional Product Life Cycles Niche Markets

BMI3C Unit 2 Slide 50 Nontraditional Product Life Cycles Niche Markets A small section of the market dominated by a small group of products. Short growth, level maturity. The Pet Hotel, The Cambridge Times, ethnic products

BMI3C Unit 2 Slide 51 Nontraditional Product Life Cycles Seasonal Markets

BMI3C Unit 2 Slide 52 Nontraditional Product Life Cycles Seasonal Markets Consumer demand changes and is effected by the weather. Marketers anticipate periods of high and low demand, and work to create off-season opportunities. Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates

BMI3C Unit 2 Slide 53 ACTIVITY My Fives At 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!

The Consumer Market

BMI3C Unit 2 Slide 55 The Consumer Market Read pages 50-58, make note summarizing Consumer Profiles, Demographics, using the same subheadings as the text. Make a chart summarizing pages

BMI3C Unit 2 Slide 56 The Consumer Market Consumer Profiles -the kind of people most likely to be attracted to a specific product

BMI3C Unit 2 Slide 57 The Consumer Market Consumer Profiles cohort: a group that shares common characteristics and buying habits, also called a consumer segment

BMI3C Unit 2 Slide 58 The Consumer Market Consumer Profiles primary market: the most likely consumers secondary market: other, occasional consumers

BMI3C Unit 2 Slide 59 The Consumer Market Consumer Profiles Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets PRODUCT CONSUMER PROFILE ADVERTISING

BMI3C Unit 2 Slide 60 The Consumer Market Demographics -the study of obvious characteristicts that categorize people -age, gender, family life cycle, income level, ethnicity, culture

BMI3C Unit 2 Slide 61 The Consumer Market Demographics Age generally broken down into six groups: 0-14, 15-24, 25-44, 45-64, 65-74, 75 and over Different researchers use different breakdowns

BMI3C Unit 2 Slide 62 Five Major Generations Mature60+ Baby Boomers41-59 Generation X27-40 Generation Y11-26 Millennium Kids0-10

BMI3C Unit 2 Slide 63 The Consumer Market Demographics Age Baby boomers are the most important group to most businesses.... why?

BMI3C Unit 2 Slide 64 The Consumer Market Demographics Save ½ a page of space in your notes for a chart summarizing pages 52-53

BMI3C Unit 2 Slide 65 The Consumer Market Demographics Gender Today very few products are marketed exclusively to one gender; gender roles have changed, many products are successfully marketed to both.

BMI3C Unit 2 Slide 66 The Consumer Market Demographics Family Life Cycle A business may sell its products to various groups, but it will adjust marketing strategies for each.

BMI3C Unit 2 Slide 67 The Consumer Market Demographics Save ½ a page of space in your notes to copy table from page 57

BMI3C Unit 2 Slide 68 The Consumer Market Demographics Income Level Businesses use this to determine whom to market to. Upper-income group can/will buy more expensive items.

BMI3C Unit 2 Slide 69 The Consumer Market Demographics Income Level Most businesses target customers of average income and compete for customers’ discretionary income.

BMI3C Unit 2 Slide 70 The Consumer Market Demographics Ethnicity and Culture especially important to a company wanting to get involved in international trade; must know what is acceptable by others.

BMI3C Unit 2 Slide 71 HOMEWORK 1.Copy charts from pages and page 57 into your notes in the appropriate spots.

BELL WORK Read “Info Tech”, page 55, answer questions BMI3 C Unit 2 Slide 72

BMI3C Unit 2 Slide 73 The Consumer Market Psychographics a system for measuring consumer’s beliefs, opinions, and interests group consumers by religion, taste, lifestyles, attitudes, personality – psychological factors

BMI3C Unit 2 Slide 74 The Consumer Market Geographics Marketers are also interested in where consumers live.

BMI3C Unit 2 Slide 75 The Consumer Market Geographics Urban consumer live within the boundaries of a city live in apartments, condos, houses with small yards spend on cultural events, restaurants, public transport

BMI3C Unit 2 Slide 76 The Consumer Market Geographics Suburban consumer lives on the outskirts of the city needs at least one car spends money on gardens, barbecues, home furnishings almost always commutes

BMI3C Unit 2 Slide 77 The Consumer Market Geographics Rural consumer usually need a truck to carry items often has large parcels of land and needs riding mower, tractor, other farm equipment

BMI3C Unit 2 Slide 78 The Consumer Market Geographics Brand Development Index (BDI) used to see how well a product is selling in one region in comparison to the total market

BMI3C Unit 2 Slide 79 The Consumer Market Geographics Brand Development Index (BDI) If BDI 1, brand is developed better than average. per capita sales in region per capita sales across entire market = BDI

BMI3C Unit 2 Slide 80 Brand Development Index (BDI) Example Hostess Potato Chips Pop. of Canada: 30M Sales nationwide: $120M Pop. of Cambridge: 100K Sales in Cambridge: 350K

BMI3C Unit 2 Slide ÷ ÷ 30 = =.875 Brand Development Index (BDI) Example A value under 1 means the brand is not fully developed in this area

BMI3C Unit 2 Slide 82 Brand Development Index (BDI) Example Hostess Potato Chips Pop. of Canada: 30M Sales nationwide: $120M Pop. of Toronto: 4M Sales in Toronto: 18M

BMI3C Unit 2 Slide ÷ ÷ 30 = = Brand Development Index (BDI) Example A value greater than 1 means the brand is fully developed in this area

BMI3C Unit 2 Slide 84 WARM-UP TASK 1.Grab a magazine 2.Find an ad 3.Identify—in as much detail as possible—the target market for the advertised item

Product Use Statistics

BMI3C Unit 2 Slide 86 Product Use Statistics Groups consumers based on frequency of use: –heavy user –medium user –light user –non-user often grouped together

BMI3C Unit 2 Slide 87 Product Use Statistics Non-users Group #1: those entering the market category for the first time.

BMI3C Unit 2 Slide 88 Product Use Statistics Marketers 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

BMI3C Unit 2 Slide 89 Product Use Statistics Group #2: individuals who do not plan to use products in this category.

BMI3C Unit 2 Slide 90 Product Use Statistics Marketers must create a value equation to change consumers’ habits and opinions, and convince consumers to purchase product. cell phone industry

BMI3C Unit 2 Slide 91 Product Use Statistics TOTAL BENEFITS must be greater than TOTAL COSTS to create VALUE

Purchase Decision Making Process

BMI3C Unit 2 Slide 93 Purchase Decision Making Process Discover the need or want. I’m hungry

BMI3C Unit 2 Slide 94 Purchase Decision Making Process Set criteria for what will satisfy your need or want. quick, no prep work, something to munch on, can eat on couch

BMI3C Unit 2 Slide 95 Purchase Decision Making Process Search for products which match your criteria. popcornchips breadcarrots applepeanuts

BMI3C Unit 2 Slide 96 Purchase Decision Making Process Make your decision based on your criteria. popcornchips breadcarrots applepeanuts

BMI3C Unit 2 Slide 97 Purchase Decision Making Process Purchase the product. Go to the kitchen, grab some chips.

BMI3C Unit 2 Slide 98 Purchase Decision Making Process Evaluate your purchase decision. Was I satisfied with my decision?

BMI3C Unit 2 Slide 99 Purchase Decision Making Process The process takes longer the more expensive the product because a)more money → bigger risk b)less experience with more expensive items

BMI3C Unit 2 Slide 100 Purchase Decision Making Process Motivation biological need emotional need rational forces social forces → peer pressure → celebrity endorsements

BMI3C Unit 2 Slide 101 Purchase Decision Making Process 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.

BMI3C Unit 2 Slide 102 Website Revamp The Doyle Website Development team wants to set up a new resource section for parents. They also want to give the section a new catchy title. 1.Who is the primary market? 2.Who is the secondary market? 3.What would be a catchy name for the new section of the site to appeal to the primary market?

BMI3C Unit 2 Slide 103 ASSIGNMENT Read 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