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) BMI3C Unit 2 Slide 1

THE CONSUMER CHAPTER 2

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 3

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 4

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

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 6

NEEDS AND WANTS Marketers need to make a clear distinction between needs and wants. why? BMI3C Unit 2 Slide 7

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 8

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 9

CONSUMER DEMAND Consumer demand changes based on economic shifts and availability of new products. BMI3C Unit 2 Slide 10 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

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 11

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 12

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 13

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 15

PRODUCT LIFE CYCLES The traditional PLC consists of five stages. BMI3C Unit 2 Slide 16 introduction growth maturity decline decision point

PRODUCT LIFE CYCLES Homework In your notebook summarize the five steps of the traditional Product Life Cycle. BMI3C Unit 2 Slide 17

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 18

PRODUCT LIFE CYCLES Introduction Stage Who buys? Curious people, those who want new things first: early adopters, or trendsetters BMI3C Unit 2 Slide 19

PRODUCT LIFE CYCLES Introduction Stage marketing: informs the consumer about product quickly establishes value equation BMI3C Unit 2 Slide 20

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 21

PRODUCT LIFE CYCLES Growth Stage others start to buy product reputation spreads manufacturers advertise heavily BMI3C Unit 2 Slide 22

PRODUCT LIFE CYCLES BMI3C Unit 2 Slide 23 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 BMI3C Unit 2 Slide 24

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 25

PRODUCT LIFE CYCLES Market Share Example Coca-Cola owns 47% of the market share (47/100) BMI3C Unit 2 Slide 26 CompanyRevenue Coca Cola$ 47.0 M Pepsi Cola$ 46.5 M PC Cola$ 4.5 M MC Cola$ 2.0 M Total$ 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... BMI3C Unit 2 Slide 27

PRODUCT LIFE CYCLES Growth Stage eventually only the most competitive products remain on the market How do you compete? BMI3C Unit 2 Slide 28

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 29

PRODUCT LIFE CYCLES BMI3C Unit 2 Slide 30 Maturity Stage The 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 BMI3C Unit 2 Slide 31

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 32

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 33

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 34

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 35

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 36

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 37

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 38

TODAY’S AGENDA MITRW Activity sheet Note A little friendly competition BMI3C Unit 2 Slide 39

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 41

NONTRADITIONAL PRODUCT LIFE CYCLES Fads BMI3C Unit 2 Slide 42

NONTRADITIONAL PRODUCT LIFE CYCLES Fads A product which is extremely popular for a very brief period of time, and loses popularity just as quickly. BMI3C Unit 2 Slide 43 Rubik’s cube, Cabbage Patch Kids, tamagotchi, Pet rock, “whatever”, “yadda yadda”

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 44

NONTRADITIONAL PRODUCT LIFE CYCLES Trends BMI3C Unit 2 Slide 45

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. BMI3C Unit 2 Slide 46 Organic foods, Beanie babies, the Simpsons, cell phones

NONTRADITIONAL PRODUCT LIFE CYCLES Niche Markets BMI3C Unit 2 Slide 47

Niche Markets A small section of the market dominated by a small group of products. Short growth, level maturity. BMI3C Unit 2 Slide 48 The Pet Hotel, The Cambridge Times, ethnic products NONTRADITIONAL PRODUCT LIFE CYCLES

Seasonal Markets BMI3C Unit 2 Slide 49

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. BMI3C Unit 2 Slide 50 Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates

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! BMI3C Unit 2 Slide 51

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 52

BELL WORK 1.Read Show Mr. M yesterday’s homework BMI3C Unit 2 Slide 53

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 55

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

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

THE CONSUMER MARKET Consumer Profiles primary market: the most likely consumers secondary market: other, occasional consumers BMI3C Unit 2 Slide 58

THE CONSUMER MARKET Consumer Profiles Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets BMI3C Unit 2 Slide 59 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 BMI3C Unit 2 Slide 60

THE CONSUMER MARKET Demographics Age generally broken down into six groups: 0-14, 15-34, 35-50, 51-69, 70-88, 88 and over Different researchers use different breakdowns BMI3C Unit 2 Slide 61

SIX MAJOR GENERATIONS BMI3C: Unit 2 Slide 62 GenerationAgeCharacteristics GI Generation Children of the WWI generation & fighters in WWII & young in the Great Depression Mature Radio; Big-Band/Swing music Korean and Vietnam War generation Baby Boomers Rock ‘n Roll; first TV generation; save-the-world Generation X latch-key kids Generation Y Millennium Kids digital literacy as they grew up in a digital environment; 24/7 place; want fast and immediate processing Generation Z Born after 2001 Tweens: Toddler/Elementary never known a world without computers and cell phones

THE CONSUMER MARKET Demographics Age Baby boomers are the most important group to most businesses.... why? BMI3C Unit 2 Slide 63

THE CONSUMER MARKET Demographics Save ½ a page of space in your notes for a chart summarizing pages BMI3C Unit 2 Slide 64

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 65

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 66

THE CONSUMER MARKET Demographics Save ½ a page of space in your notes to copy table from page 57 BMI3C Unit 2 Slide 67

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 68

THE CONSUMER MARKET Demographics Income Level Most businesses target customers of average income and compete for customers’ discretionary income. BMI3C Unit 2 Slide 69

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 70

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

BELL WORK Read “Info Tech” page 55 answer questions BMI3C Unit 2 Slide 72

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 73

THE CONSUMER MARKET Geographics Marketers are also interested in where consumers live. BMI3C Unit 2 Slide 74

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 75

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 76

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 77

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 78

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

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 80

BRAND DEVELOPMENT INDEX (BDI) Example A value under 1 means the brand is not fully developed in this area. BMI3C Unit 2 Slide ÷ ÷ 30 = =

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 82

BRAND DEVELOPMENT INDEX (BDI) Example A value greater than 1 means the brand is fully developed in this area. BMI3C Unit 2 Slide ÷ ÷ 30 = =

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 BMI3C Unit 2 Slide 84

PRODUCT USE STATISTICS

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

PRODUCT USE STATISTICS Non-users Group #1: those entering the market category for the first time. BMI3C Unit 2 Slide 87

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 88

PRODUCT USE STATISTICS Group #2: individuals who do not plan to use products in this category. BMI3C Unit 2 Slide 89

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 90

PRODUCT USE STATISTICS TOTAL BENEFITS must be greater than TOTAL COSTS to create VALUE BMI3C Unit 2 Slide 91

PURCHASE DECISION MAKING PROCESS

Discover the need or want. I’m hungry BMI3C Unit 2 Slide 93

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 94

PURCHASE DECISION MAKING PROCESS Search for products which match your criteria. popcornchips breadcarrots applepeanuts BMI3C Unit 2 Slide 95

PURCHASE DECISION MAKING PROCESS Make your decision based on your criteria. popcornchips breadcarrots applepeanuts BMI3C Unit 2 Slide 96

PURCHASE DECISION MAKING PROCESS Purchase the product. Go to the kitchen, grab some chips. BMI3C Unit 2 Slide 97

Evaluate your purchase decision. Was I satisfied with my decision? BMI3C Unit 2 Slide 98 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 99

PURCHASE DECISION MAKING PROCESS Motivation biological need emotional need rational forces social forces → peer pressure → celebrity endorsements BMI3C Unit 2 Slide 100

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 101

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 102

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 BMI3C Unit 2 Slide 103