1. THE CONSUMER
Chapter 2

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?
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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?
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4. Maslow’s Heirarchy of Needs
Needs and Wants
self-actualization/fulfillment
esteem
belonging
safety
physiological
Maslow’s Heirarchy of Needs
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5. 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.
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6. Needs and Wants
Marketers need to make a clear distinction between needs and wants.
why?
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7. Needs and Wants
In places with poverty, war, or oppression basic needs may not be met. Marketing focuses on meeting needs.
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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.
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9. Consumer Demand
Consumer demand changes based on economic shifts and availability of new products.
economy is stable
economy is in a slump
unemployment down
unemployment up
demand for goods and services UP
people will buy things they want
demand for goods & services DOWN
people will only buy things they need
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10. educated guess, research, historic trends
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
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11. Demand changes as retailers enter/exit the marketplace.
Consumer Demand
Demand changes as retailers enter/exit the marketplace.
Too many sellers of a product =  demand
As some close, less product available =  demand
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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.
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13. Product Life Cycles

14. 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
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15. Product Life Cycles maturity decline growth decision point
introduction
The traditional PLC consists of five stages.
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16. Product Life Cycles
Homework
In your notebook summarize the five steps of the traditional Product Life Cycle.
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17. Introduction Stage Product Life Cycles
product is first introduced, “product launch”
initial price is high to help recover costs
costs include:
machinery, set-up, training, storage, promotion, packaging, research, etc.
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18. Introduction Stage Product Life Cycles
Who buys? Curious people, those who want new things first: early adopters, or trendsetters
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19. Introduction Stage Product Life Cycles marketing:
informs the consumer about product
quickly establishes value equation
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20. Introduction Stage Product Life Cycles
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
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21. Growth Stage Product Life Cycles others start to buy product
reputation spreads
manufacturers advertise heavily
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22. Growth Stage Product Life Cycles
- starts where costs have been recovered start making profit
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23. Growth Stage Product Life Cycles
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
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24. Growth Stage Product Life Cycles
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
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25. Market Share Example Product Life Cycles Company Revenue Coca Cola
Coca-Cola owns 47% of the market share (47/100)
Company
Revenue
Coca Cola
$ 47.0 M
Pepsi Cola
$ 46.5 M
PC Cola
$ 4.5 M
MC Cola
$ 2.0 M
Total
$ M
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26. Growth Stage Product Life Cycles
factors preventing companies from realizing profit are called barriers to entry
may include: small market size, cost of R&D, advertising, equipment...
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27. Growth Stage Product Life Cycles
eventually only the most competitive products remain on the market
How do you compete?
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28. Growth Stage Product Life Cycles
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)
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29. Maturity Stage Product Life Cycles
The period when sales start to level off
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30. Maturity Stage Product Life Cycles
marketers keep the brand name in front of consumers
success and longevity of the product is highlighted
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31. Maturity Stage Product Life Cycles
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
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32. Maturity Stage Product Life Cycles 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.
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33. Decline Stage Product Life Cycles
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
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34. Decline Stage Product Life Cycles
other methods to reverse a decline: redesigning, reformulating, repackaging
may decide to remove the product from the market altogether
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35. Decision Point Stage Product Life Cycles the final stage of the PLC
marketers must make important decisions regarding a product’s future
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36. Decision Point Stage Product Life Cycles
product may be reformulated, repackaged, and reintroduced
most often maintenance of a product involves new promotion and new pricing
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37. Decision Point Stage Product Life Cycles
if there is little hope for more profit–due to market saturation, decreased demand, or otherwise–product may be abandoned
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38. A little friendly competition
Today’s Agenda
MITRW
Activity sheet
Note
A little friendly competition
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39. Nontraditional Product Life Cycles

40. 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.
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41. Nontraditional Product Life Cycles
Fads
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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.
Rubik’s cube, Cabbage Patch Kids, tamagotchi, Pet rock, “whatever”, “yadda yadda”
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43. 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.
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44. Nontraditional Product Life Cycles
Trends
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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.
Organic foods, Beanie babies, the Simpsons, cell phones
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46. Nontraditional Product Life Cycles
Niche Markets
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47. 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
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48. Nontraditional Product Life Cycles
Seasonal Markets
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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.
Ice cream parlours, resorts, lawn mowers, snow shovels, ice skates
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50. My Fives PRIZES FOR BEST TABLE! ACTIVITY
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!
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51. Work on this quietly until the bell!
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!
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52. BELL WORK
Read 2.2
Show Mr. M yesterday’s homework
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53. The Consumer Market

54. Consumer Profiles The Consumer Market
the kind of people most likely to be attracted to a specific product
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55. Consumer Profiles The Consumer Market
cohort: a group that shares common characteristics and buying habits, also called a consumer segment
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56. Consumer Profiles The Consumer Market
primary market: the most likely consumers
secondary market: other, occasional consumers
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57. Consumer Profiles The Consumer Market PRODUCT CONSUMER PROFILE
Knowledge of consumer profiles affects distribution, advertising, product design, media, international markets
PRODUCT
CONSUMER PROFILE
ADVERTISING
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58. Demographics The Consumer Market
the study of obvious characteristicts that categorize people
age, gender, family life cycle, income level, ethnicity, culture
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59. Demographics The Consumer Market 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
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60. SIX Major Generations Generation Age Characteristics
GI Generation
89+
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
15-34
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
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61. Baby boomers are the most important group to most businesses.... why?
The Consumer Market
Demographics
Age
Baby boomers are the most important group to most businesses.... why?
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62. Demographics The Consumer Market
Save ½ a page of space in your notes for a chart summarizing pages 52-53
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63. Demographics The Consumer Market Gender
Today very few products are marketed exclusively to one gender; gender roles have changed, many products are successfully marketed to both.
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64. Demographics The Consumer Market Family Life Cycle
A business may sell its products to various groups, but it will adjust marketing strategies for each.
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65. Demographics The Consumer Market
Save ½ a page of space in your notes to copy table from page 57
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66. Demographics The Consumer Market Income Level
Businesses use this to determine whom to market to. Upper-income group can/will buy more expensive items.
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67. Demographics The Consumer Market Income Level
Most businesses target customers of average income and compete for customers’ discretionary income.
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68. Demographics The Consumer Market Ethnicity and Culture
especially important to a company wanting to get involved in international trade; must know what is acceptable by others.
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69. HOMEWORK
Copy charts from pages and page 57 into your notes in the appropriate spots.
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70. Read “Info Tech” page 55 answer questions
BELL WORK
Read “Info Tech” page 55 answer questions
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71. Psychographics The Consumer Market
a system for measuring consumer’s beliefs, opinions, and interests
group consumers by religion, taste, lifestyles, attitudes, personality – psychological factors
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72. Geographics The Consumer Market
Marketers are also interested in where consumers live.
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73. Geographics The Consumer Market live within the boundaries of a city
Urban consumer
live within the boundaries of a city
live in apartments, condos, houses with small yards
spend on cultural events, restaurants, public transport
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74. Geographics The Consumer Market lives on the outskirts of the city
Suburban consumer
lives on the outskirts of the city
needs at least one car
spends money on gardens, barbecues, home furnishings
almost always commutes
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75. Geographics The Consumer Market usually need a truck to carry items
Rural consumer
usually need a truck to carry items
often has large parcels of land and needs riding mower, tractor, other farm equipment
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76. Geographics The Consumer Market Brand Development Index (BDI)
used to see how well a product is selling in one region in comparison to the total market
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77. = BDI The Consumer Market Geographics per capita sales in region
Brand Development Index (BDI)
If BDI < 1, brand is underdeveloped in this area. If BDI > 1, brand is developed better than average.
per capita sales in region
= BDI
per capita sales across entire market
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78. Brand Development Index (BDI)
Example
Hostess Potato Chips
Pop. of Canada: 30M
Sales nationwide: $120M
Pop. of Cambridge: 100K
Sales in Cambridge: 350K
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79. Brand Development Index (BDI)
Example
A value under 1 means the brand is not fully developed in this area.
350 ÷ 100
3.5
= = .875
120 ÷ 30 4
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80. Brand Development Index (BDI)
Example
Hostess Potato Chips
Pop. of Canada: 30M
Sales nationwide: $120M
Pop. of Toronto: 4M
Sales in Toronto: 18M
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81. Brand Development Index (BDI)
Example
A value greater than 1 means the brand is fully developed in this area.
18 ÷ 4
4.5
= = 1.125
120 ÷ 30 4
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82. Grab a magazine Find an ad
WARM-UP TASK
Grab a magazine
Find an ad
Identify—in as much detail as possible—the target market for the advertised item
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83. Product Use Statistics

84. Product Use Statistics
Groups consumers based on frequency of use:
heavy user
medium user
light user
non-user
often grouped together
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85. Product Use Statistics
Non-users
Group #1: those entering the market category for the first time.
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86. 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
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87. Product Use Statistics
Group #2: individuals who do not plan to use products in this category.
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88. Product Use Statistics
Marketers must create a value equation to change consumers’ habits and opinions, and convince consumers to purchase product.
cell phone industry
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89. Product Use Statistics
TOTAL BENEFITS
must be greater than
TOTAL COSTS
to create
VALUE
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90. Purchase Decision Making Process

91. Purchase Decision Making Process
Discover the need or want. I’m hungry
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92. 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
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93. Purchase Decision Making Process
Search for products which match your criteria. popcorn chips bread carrots apple peanuts
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94. Purchase Decision Making Process
Make your decision based on your criteria. popcorn chips bread carrots apple peanuts
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95. Purchase Decision Making Process
Purchase the product. Go to the kitchen, grab some chips.
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96. Purchase Decision Making Process
Evaluate your purchase decision. Was I satisfied with my decision?
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97. Purchase Decision Making Process
The process takes longer the more expensive the product because
more money → bigger risk
less experience with more expensive items
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98. Purchase Decision Making Process
Motivation
biological need
emotional need
rational forces
social forces
→ peer pressure
→ celebrity endorsements
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99. 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.
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100. 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
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