1. MARKETING PROCESSES AND CONSUMER BEHAVIOR11
MARKETING PROCESSES AND CONSUMER BEHAVIOR
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2. After reading this chapter, you should be able to:
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to:
Explain the concept of marketing and identify the five forces that constitute the external marketing environment.
Explain the purpose of a marketing plan and identify the four components of the marketing mix.
Explain market segmentation and how it is used in target marketing.
Describe the key factors that influence the consumer buying process.
Discuss the three categories of organizational markets.
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3. L E A R N I N G O B J E C T I V E S (cont’d)
After reading this chapter, you should be able to:
Explain the definition of a product as a value package and classify goods and services.
Describe the key considerations in the new product development process.
Explain the importance of branding and packaging.
Discuss the challenges that arise in adopting an international marketing mix.
Identify the ways that small businesses can benefit from an understanding of the marketing mix.
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4. 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
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5. What Is Marketing? Marketing Providing Value and Satisfaction
“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
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6. 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
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7. 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
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8. 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
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9. 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
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10. 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, place, and promotion
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
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11. Target Marketing and Market Segmentation
Target Markets
Groups of people with similar wants and needs and 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
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12. Target Marketing and Market Segmentation (cont’d)
Geographic Variables
Demographic Variables
Identifying Market Segments
Psychographic Variables
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13. Demographic Variables
Age
Under 5, 5–11, 12–19, 20–34, 35–49, 50–64, 65+
Education
Grade school or less, some high school, graduated high school, some college, college degree, advanced degree
Family life cycle
Young single, young married without children, young married with children, older married with children under 18, older married without children under 18, older single, other
Family size
1, 2–3, 4–5, 6+
Income
Under $9,000, $9,000–$14,999, $15,000–$24,999, $25,000–$34,999, $35,000–$45,000, over $45,000
Nationality
African, American, Asian, British, Eastern European, French, German, Irish, Italian, Latin American, Middle Eastern, Scandinavian
Race
Native American, Asian, African American, Caucasian
Religion
Buddhist, Catholic, Hindu, Jewish, Muslim, Protestant
Sex
Male, female
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14. Understanding Consumer Behavior
Influences on Consumer Behavior
Psychological influences
Personal influences
Social influence
Cultural influence
Brand Loyalty
Consumers who regularly purchase products because they are satisfied with their performance
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15. 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
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16. 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
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17. What Is a Product? Product Defined Product Features Benefits
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
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18. Classifying Goods and Services
Classifying Consumer Products
Convenience goods and services
Frequent purchase, inexpensive, immediate consumption, and little search and consideration
Shopping goods and services
Less frequent purchase, more expensive, and more search and comparison of products
Specialty goods and services
Infrequent (or one-time) purchase, most expensive, and an extensive search effort for specific product
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19. Classifying Goods and Services (cont’d)
Classifying Industrial Products
Expense items
Goods or services that are consumed within a year by firms producing other goods or supplying other services
Capital items
Permanent (expensive and long-lasting) goods and services that have expected lives of more than a year and, typically, of several years
Capital goods
Capital services
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20. The Product Mix Product Mix Product Line
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
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21. 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
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22. Developing New Products (cont’d)
Product Life Cycle
Introduction
Growth
Maturity
Decline
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23. Identifying Products Branding Products Branding Brand loyalty
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
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24. 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
Viral marketing
Relying on word-of-mouth and the Internet to spread information like a “virus” from person-to-person about products and ideas
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25. 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
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26. 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
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27. 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
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28. 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
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29. K E Y T E R M S 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
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30. K E Y T E R M S (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
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