Business Copyright 2005 Prentice- Hall, Inc. 10-1

Business Copyright 2005 Prentice- Hall, Inc Part Three: Understanding Principles of Marketing 10.Understanding Market Processes And Consumer Behavior 11.Developing And Pricing Products 12.Distributing Products 13.Promoting Products

10-3 Chapter 10 Understanding Marketing Processes and Consumer Behavior

Business Copyright 2005 Prentice- Hall, Inc Chapter Outline What Is Marketing? What Is Marketing? Target Marketing/Segmentation Target Marketing/Segmentation Marketing Research Marketing Research Understanding Consumer Behavior Understanding Consumer Behavior Organizational Marketing & Buying Behavior Organizational Marketing & Buying Behavior International Marketing Mix International Marketing Mix Small Business & The Marketing Mix Small Business & The Marketing Mix

Business Copyright 2005 Prentice- Hall, Inc Marketing Mix Of Goods & Services DevelopingDeveloping PricingPricing PlacingPlacing PromotingPromoting

Business Copyright 2005 Prentice- Hall, Inc Value & Satisfaction Benefits- Functions Of Product & Emotional SatisfactionBenefits- Functions Of Product & Emotional Satisfaction Benefits Must Exceed Costs To Be Of Value To The ConsumerBenefits Must Exceed Costs To Be Of Value To The Consumer Value = Benefits Costs Costs

Business Copyright 2005 Prentice- Hall, Inc Utility = Satisfy Need/Want TimeTime PlacePlace Ownership/PossessionOwnership/Possession FormForm

Business Copyright 2005 Prentice- Hall, Inc Goods, Services, Ideas Consumer GoodsConsumer Goods Industrial GoodsIndustrial Goods Services- IntangibleServices- Intangible Tangible

Business Copyright 2005 Prentice- Hall, Inc Relationship Marketing Emphasizes Economic/Social Ties Between Buyer & SellerEmphasizes Economic/Social Ties Between Buyer & Seller NetworkingNetworking

Business Copyright 2005 Prentice- Hall, Inc Marketing Environment

Business Copyright 2005 Prentice- Hall, Inc Marketing Environment Political/Legal- Foreign & DomesticPolitical/Legal- Foreign & Domestic Social/Culture- Changing Values In Today’s Dynamic MarketSocial/Culture- Changing Values In Today’s Dynamic Market Technological- ObsolescenceTechnological- Obsolescence Economic- Patterns/Levels Of SpendingEconomic- Patterns/Levels Of Spending

Business Copyright 2005 Prentice- Hall, Inc Crude Oil Prices- Yearly Average Source: “History if Illinois Basin Posted Crude Oil Prices”, OPEC Formed Yom Kippur War US Emphasis On Energy Efficiency Iraq/Iran War Saudi Arabia Increases Production Gulf War Import Cutbacks

Business Copyright 2005 Prentice- Hall, Inc Competitive Environment Substitute ProductsSubstitute Products Brand CompetitionBrand Competition International CompetitionInternational Competition

Business Copyright 2005 Prentice- Hall, Inc Marketing Mix (4 P’s) Product Place Price Promotion

Business Copyright 2005 Prentice- Hall, Inc Product Good, Service, Idea To Fill Need Or WantGood, Service, Idea To Fill Need Or Want Product DifferentiationProduct Differentiation

Business Copyright 2005 Prentice- Hall, Inc VHS Vs. DVD Rental Source: Video Software Dealers Association

Business Copyright 2005 Prentice- Hall, Inc Price Price Must Create Profit By:Price Must Create Profit By: –Covering Costs –Attract Customers High-Low StrategyHigh-Low Strategy –Low = Large Sales Volume –High = Greater Profit Per Unit Sold

Business Copyright 2005 Prentice- Hall, Inc Place Getting Product From Producer To ConsumerGetting Product From Producer To Consumer Decisions Include:Decisions Include: –Storage –Mode Of Transportation

Business Copyright 2005 Prentice- Hall, Inc Channels Of Distribution ProducerProducerProducer Consumer ConsumerConsumer Retailer Wholesaler Retailer

Business Copyright 2005 Prentice- Hall, Inc Promotion Communicate InformationCommunicate Information Tools:Tools: –Advertising –Personal Selling –Sales Promotion –Public Relations

Business Copyright 2005 Prentice- Hall, Inc Web Effect On Media Shopping What’s the biggest way the Web has changed how you shop for media? Source: “Add To Cart” Wired, 10/04, p. 70.

Business Copyright 2005 Prentice- Hall, Inc Target Market Target Market- Group With Similar Needs/WantsTarget Market- Group With Similar Needs/Wants Product Positioning- According To Consumers’ PerceptionProduct Positioning- According To Consumers’ Perception

Business Copyright 2005 Prentice- Hall, Inc Market Segmentation Variables GeographicGeographic DemographicDemographic PsychographicPsychographic BehavioralBehavioral

Business Copyright 2005 Prentice- Hall, Inc Geographic Variables Places Consumers ResidePlaces Consumers Reside Countries > NeighborhoodsCountries > Neighborhoods Water = BoatsWater = Boats Mountains/Rural = Four-Wheel Drive VehiclesMountains/Rural = Four-Wheel Drive Vehicles Urban Area = Designer ClothingUrban Area = Designer Clothing

Business Copyright 2005 Prentice- Hall, Inc Demographic Variables AgeAge IncomeIncome GenderGender Ethnic BackgroundEthnic Background Marital Status Race Religion Social Class Others?

Business Copyright 2005 Prentice- Hall, Inc Psychographic Variables LifestyleLifestyle InterestsInterests AttitudesAttitudes Can Be Changed By Marketing EffortsCan Be Changed By Marketing Efforts

Business Copyright 2005 Prentice- Hall, Inc Behavioral Variables Ways In Which Product/Service Is UsedWays In Which Product/Service Is Used Benefits ExpectedBenefits Expected Reasons For PurchaseReasons For Purchase Brand Loyalty vs. SwitcherBrand Loyalty vs. Switcher

Business Copyright 2005 Prentice- Hall, Inc Marketing Research Study Consumer Needs/WantsStudy Consumer Needs/Wants Determine Ways Sellers Can Satisfy Needs/WantsDetermine Ways Sellers Can Satisfy Needs/Wants

Business Copyright 2005 Prentice- Hall, Inc Marketing Research & Process

Business Copyright 2005 Prentice- Hall, Inc Research Process Study Situation Select Method Collect Data Analyze Data Prepare Report

Business Copyright 2005 Prentice- Hall, Inc Research Methods Observation Focus Group Experimentation Surveys

Business Copyright 2005 Prentice- Hall, Inc Influences On Consumer Behavior PsychologicalPsychological PersonalPersonal SocialSocial CulturalCultural

Business Copyright 2005 Prentice- Hall, Inc Buying Process

Business Copyright 2005 Prentice- Hall, Inc Data Warehousing- Collecting, Storing, & Retrieving DataWarehousing- Collecting, Storing, & Retrieving Data Mining- Searching, Sifting, & Reorganizing DataMining- Searching, Sifting, & Reorganizing Data

Business Copyright 2005 Prentice- Hall, Inc Organizational Markets IndustrialIndustrial ResellerReseller Government/InstitutionalGovernment/Institutional

Business Copyright 2005 Prentice- Hall, Inc Buying Behavior- Organizational Buyer DifferencesBuyer Differences –Professional –Specialist –Experts Buyer-Seller RelationshipBuyer-Seller Relationship

Business Copyright 2005 Prentice- Hall, Inc Marketing Mix- International Products- Redesign For Foreign BuyerProducts- Redesign For Foreign Buyer Pricing- Cover Increased Cost Of Transport/SellingPricing- Cover Increased Cost Of Transport/Selling Distribution- Delays In Establishing Network For StartupDistribution- Delays In Establishing Network For Startup Promotion- Cultural DifferencesPromotion- Cultural Differences

Business Copyright 2005 Prentice- Hall, Inc Marketing Mix- Small Business Products- Limited Buying MarketProducts- Limited Buying Market Pricing- Incorrect Cost EstimationPricing- Incorrect Cost Estimation Distribution- Location Is CriticalDistribution- Location Is Critical Promotion- Local Which Is CheaperPromotion- Local Which Is Cheaper