11 chapter Business Essentials, 7 th Edition Ebert/Griffin © 2009 Pearson Education, Inc. Marketing Processes and Consumer Behavior Instructor Lecture PowerPoints PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College

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After reading this chapter, you should be able to: 1.Explain the concept of marketing and identify the five forces that constitute the external marketing environment. 2.Explain the purpose of a marketing plan and identify the four components of the marketing mix. 3.Explain market segmentation and how it is used in target marketing. 4.Describe the key factors that influence the consumer buying process. 5.Discuss the three categories of organizational markets. L E A R N I N G O B J E C T I V E S © 2009 Pearson Education, Inc.

After reading this chapter, you should be able to: 6.Explain the definition of a product as a value package and classify goods and services. 7.Describe the key considerations in the new product development process. 8.Explain the importance of branding and packaging. 9.Discuss the challenges that arise in adopting an international marketing mix. 10.Identify the ways that small businesses can benefit from an understanding of the marketing mix. L E A R N I N G O B J E C T I V E S (cont’d) © 2009 Pearson Education, Inc.

What’s in It for Me? Why does marketing matter to you? – By grasping this chapter’s presentation of marketing methods and ideas, you’ll benefit in two ways: You’ll be better prepared to use marketing in your career as both employee and manager You’ll be a more informed consumer with greater awareness of how businesses use marketing to gain your purchases © 2009 Pearson Education, Inc.

What Is Marketing? Marketing – “A set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” (AMA) Finding a need and fulfilling it Providing Value and Satisfaction – Consumers buy products that offer the best value when it comes to meeting their needs and wants © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Value and Benefits – Value compares a product’s benefits with its costs. – Benefits include not only the functions of the product but also the emotional satisfaction associated with owning, experiencing, or possessing it. Value and Utility – Form utility – Time utility – Place utility – Ownership utility © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Goods, Services, and Ideas – Consumer goods: Tangible goods that consumers may buy for personal use Consumer marketing – Industrial goods: Physical items used by companies to produce other products Industrial marketing – Services: Products with intangible (nonphysical) features Service marketing Relationship Marketing – Emphasizes building lasting relationships with customers and suppliers © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Data Warehousing and Data Mining for Building Customer Relationships – Data warehousing: The compiling and storage of consumer data – Data mining: Automating the massive analysis of data by using computers to sift, sort, and search for previously undiscovered clues about what customers look at, react to, and how they might be influenced © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) The Marketing Environment – Political-legal environment – Sociocultural environment – Technological environment – Economic environment – Competitive environment Substitute products Brand competition International competition © 2009 Pearson Education, Inc.

What Is Marketing? (cont’d) Strategy: The Marketing Mix – Marketing Plan A detailed strategy for focusing marketing efforts on consumer needs and wants – Marketing Mix Product – Differentiating a product Pricing – Selecting the best price at which to sell a product Place – Distributing a product through the proper channels Promotion – Communicating information about a product © 2009 Pearson Education, Inc.

Target Marketing and Market Segmentation Target Markets – Groups of people with similar wants and needs who can be expected to show interest in the same products Market Segmentation – Dividing a market into categories of customer types or “segments” Geographic Demographic Psychographic © 2009 Pearson Education, Inc.

TABLE 11.1 Demographic Variables © 2009 Pearson Education, Inc.

Understanding Consumer Behavior Influences on Consumer Behavior – Psychological influences – Personal influences – Social influences – Cultural influences Brand Loyalty – Consumers who regularly purchase products because they are satisfied with their performance © 2009 Pearson Education, Inc.

FIGURE 11.1 The Consumer Buying Process Problem\Need Recognition Information Seeking Evaluation of Alternatives © 2009 Pearson Education, Inc.

Organizational Marketing and Buying Behavior Organizational Markets – Industrial Markets Businesses that buy goods to be converted into other products or that are used up during production – Reseller Markets Intermediaries, including wholesalers and retailers, that buy and resell finished goods – Government and Institutional Markets Federal and state governments Nongovernmental organizations © 2009 Pearson Education, Inc.

Organizational Marketing and Buying Behavior (cont’d) Organizational Buying Behavior – Differences in Buyers Organizational buyers are professionals who negotiate the buyer-seller agreement (purchase terms) – Specialists in purchasing a line of items – Experts about the products purchased – Differences in the Buyer-Seller Relationship Frequent purchases Enduring long-term relationships Buyers and sellers may work closely Emphasis is on personal selling © 2009 Pearson Education, Inc.

What Is a Product? Product Defined – A value package that provides a bundle of benefits and features to satisfy the needs and wants of customers Product Features – Tangible and intangible qualities built into a product Benefits – The tangible and intangible outcomes associated with acquisition or use of a product © 2009 Pearson Education, Inc.

TABLE 11.2 Categories of Consumer Products © 2009 Pearson Education, Inc.

TABLE 11.3 Industrial Products © 2009 Pearson Education, Inc.

The Product Mix Product Mix – The group of products (consumer, industrial, or both) that a company makes available for sale Product Line – A group of products that are closely related because they function in a similar manner or are sold to the same customer group who will use them in similar ways Multiple (or Diversified) Product Lines – Allow a company to grow rapidly and can help to offset the consequences of slow sales in any one product line © 2009 Pearson Education, Inc.

Developing New Products The New Product Development Process – Research and development (R&D) Departments for exploring new product possibilities – Product mortality rates Few product ideas (1 in 50) actually reach the market – Speed to market Responding to customer demand or market changes by introducing new products to the market ahead of competitors © 2009 Pearson Education, Inc.

FIGURE 11.2 Products in the Life Cycle: Stages, Sales, Cost and Profit © 2009 Pearson Education, Inc.

Identifying Products Branding Products – Branding A process of using symbols to communicate the qualities of a particular product made by a particular producer – Signals uniform quality and stimulates consumer recall – Brand loyalty Consumer preference for a particular product – Brand awareness The brand name that comes first to mind when consumers consider a particular product category © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Gaining Brand Awareness – Product placement A promotional tactic for brand exposure in which characters in television, film, music, magazines, or video games use a real product that is visible to viewers – Buzz marketing A form of word-of-mouth marketing – Viral marketing Relying on word-of-mouth and the Internet to spread information like a “virus” from person-to-person about products and ideas © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Types of Brand Names – National brands Products that are produced by, widely distributed by, and carry the name of the manufacturer – Licensed brands Companies (and even personalities) license (sell the rights to) other companies to put their names on products – Private (or private label) brands Carry the brand name that a wholesaler or retailer develops and has a manufacturer put it on a product © 2009 Pearson Education, Inc.

Identifying Products (cont’d) Packaging Products – Purposes of packaging Reduce the risk of damage, breakage, or spoilage Increase the difficulty of stealing small products Serves as an in-store advertisement that makes the product attractive Displays the brand name Identifies features and benefits Enhances the utility of the product features and benefits © 2009 Pearson Education, Inc.

The International Marketing Mix International Products – Need to adapt product to foreign markets International Pricing – Higher transportation and selling costs abroad International Distribution – Distribution network access in foreign markets International Promotion – Cultural sensitivity requires adjustments to the marketing mix © 2009 Pearson Education, Inc.

Small Business and the Marketing Mix Small-Business Products – Product failures due to lack of market potential for products or marketing to the wrong target market segments Small-Business Pricing – Losses due to pricing errors resulting from underestimating operating expenses Small-Business Distribution – Poor location choice fails to attract customers Small-Business Promotion – Careful promotion can reduce expenses © 2009 Pearson Education, Inc.

Key Terms brand awareness brand competition brand loyalty branding capital item consumer behavior consumer goods convenience good/convenience service demographic variables distribution emotional motives expense item geographic variables industrial goods industrial market institutional market international competition licensed brand market segmentation marketing marketing manager marketing mix marketing plan national brand packaging private brand (or private label) product © 2009 Pearson Education, Inc.

Key Terms (cont’d) product differentiation product feature product life cycle (PLC) product line product mix product placement psychographic variables rational motives relationship marketing reseller market services shopping good/shopping service specialty good/specialty service speed to market substitute product target market utility value value package viral marketing © 2009 Pearson Education, Inc.