1. Understanding Marketing Processes and Consumer Behavior
Chapter 12:

2. Explain the concept of marketing.
L E A R N I N G O B J E C T I V E S
Explain the concept of marketing.
Explain the purpose of a marketing plan and identify the four components of the marketing mix.
Explain market segmentation and show how it is used in target marketing.
In this chapter we will study marketing process and consumer behavior. We will explain the concept of marketing and identify the five forces that constitute the external marketing environment. We will explain the purpose of a marketing plan and identify the four components of the marketing mix. Then we will explain market segmentation and how it is used in target marketing. We will describe the key factors that influence the consumer buying process. And we will discuss the three categories of organizational markets.
Teaching Tips:
Form a team with another student. In your teams, please select one of the learning objectives we just reviewed. Please prepare a brief introduction to the topic. We will share our answers with the class.
Answers will vary. You can wait to comment on the answers until you have covered the material later in the chapter.
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3. Explain the purpose and value of marketing research.
L E A R N I N G O B J E C T I V E S
Explain the purpose and value of marketing research.
Describe the key factors that Influence the consumer buying process.
Describe the international and small-business marketing
In this chapter we will study marketing process and consumer behavior. We will explain the concept of marketing and identify the five forces that constitute the external marketing environment. We will explain the purpose of a marketing plan and identify the four components of the marketing mix. Then we will explain market segmentation and how it is used in target marketing. We will describe the key factors that influence the consumer buying process. And we will discuss the three categories of organizational markets.
Teaching Tips:
Form a team with another student. In your teams, please select one of the learning objectives we just reviewed. Please prepare a brief introduction to the topic. We will share our answers with the class.
Answers will vary. You can wait to comment on the answers until you have covered the material later in the chapter.
© 2009 Pearson Education, Inc.

4. © 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
What’s in it for you? Why does marketing matter to you?
By grasping this chapter’s presentation of marketing methods and ideas, you’ll benefit in two ways:
First, you will be better prepared to use marketing in your career as both employee and manager.
Second, you will be a more informed consumer with greater awareness of how businesses use marketing to gain your purchases.
Teaching Tips:
In your student teams, choose one of these two benefits we have just reviewed. Please discuss in your teams how you believe you will achieve the benefit.
Answers will vary. Your responses can wait until later in the class once the material has been covered.
© 2009 Pearson Education, Inc.

5. Discussion
What is marketing? Can you see marketing elements around you? Give example.

6. Marketing What Is 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 with a new product or service.
Marketing is “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,” according to the American Marketing Association.
This means finding a consumer need and fulfilling that need with a new product or service.
Market also provides value and satisfaction. Consumers buy products that offer the best value when it comes to meeting their needs and wants.
Teaching Tips:
In your student teams, please define a consumer need. Then define a consumer want. What is the difference between the two? We will share our ideas with the class.
A need, if we refer back to Maslow’s Hierarchy of Needs, is something the consumer needs in order to live or function in his life or career. This could mean food, shelter, clothing, transportation, shoes, etc. What separates consumer need from want is money. Here is an example: I need a coat because it is cold outside. I want a fake fur coat that will look trendy in the clubs.
© 2009 Pearson Education, Inc.

7. What Is Marketing?
“Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
Marketing is “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,” according to the American Marketing Association.
This means finding a consumer need and fulfilling that need with a new product or service.
Market also provides value and satisfaction. Consumers buy products that offer the best value when it comes to meeting their needs and wants.
Teaching Tips:
In your student teams, please define a consumer need. Then define a consumer want. What is the difference between the two? We will share our ideas with the class.
A need, if we refer back to Maslow’s Hierarchy of Needs, is something the consumer needs in order to live or function in his life or career. This could mean food, shelter, clothing, transportation, shoes, etc. What separates consumer need from want is money. Here is an example: I need a coat because it is cold outside. I want a fake fur coat that will look trendy in the clubs.
© 2009 Pearson Education, Inc.

8. Providing Value and Satisfaction
What Is Marketing?
Providing Value and Satisfaction
Limited financial resources force us to be selective.
Consumers buy products that offer the best value when it comes to meeting their needs and wants.
Marketing is “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,” according to the American Marketing Association.
This means finding a consumer need and fulfilling that need with a new product or service.
Market also provides value and satisfaction. Consumers buy products that offer the best value when it comes to meeting their needs and wants.
Teaching Tips:
In your student teams, please define a consumer need. Then define a consumer want. What is the difference between the two? We will share our ideas with the class.
A need, if we refer back to Maslow’s Hierarchy of Needs, is something the consumer needs in order to live or function in his life or career. This could mean food, shelter, clothing, transportation, shoes, etc. What separates consumer need from want is money. Here is an example: I need a coat because it is cold outside. I want a fake fur coat that will look trendy in the clubs.
© 2009 Pearson Education, Inc.

9. 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 = Benefits/Costs
Marketing provides 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 the product.
There are four types of value and utility:
Form utility: Designing products customers want.
Time utility: Creating sales contracts that stipulate when the product will be delivered.
Place utility: Creating contracts that stipulate where the products will be delivered to the consumer.
Ownership utility: Arranging to transfer product ownership to customers by providing and setting sales prices, setting payment terms and providing ownership documents.
Teaching Tips:
In your student teams, please select a product that you buy or use. Then please describe its value and benefits. We will share our examples with the class.
Answers will vary but should relate back to the value and benefit statements above.
© 2009 Pearson Education, Inc.

10. Value and Utility Form utility: Designing products customers want.
Time utility: Creating sales contracts that specify when the product will be delivered.
Place utility: Creating contracts that specify where the products will be delivered to the consumer.
Ownership utility: Arranging to transfer product ownership to customers by providing and setting sales prices, setting payment terms and providing ownership documents.

11. Discussion
What is the difference between needs and wants? A need, if we refer back to Maslow’s Hierarchy of Needs, is something the consumer needs in order to live or function in his life or career. This could mean food, shelter, clothing, transportation, shoes, etc. What separates consumer need from want is money. Here is an example: I need a coat because it is cold outside. I want a fake fur coat that will look trendy in the clubs.

12. Goods, Services, and Ideas
Consumer goods: Tangible goods that consumers may buy for personal use:
Durable and non-durable goods.
Consumer marketing is used to inform people about these goods.
Industrial goods: Physical items used by companies to produce other products
Industrial marketing: used to inform companies about these goods.
Marketing products includes goods, services and ideas.
Consumer goods are tangible goods that consumers may buy for personal use.
Consumer marketing is used to inform people about these goods.
Industrial goods are physical items used by companies to produce other products.
Industrial Services are products with intangible or nonphysical features.
Service marketing is used to inform the public about these intangibles.
Relationship marketing emphasizes building lasting relationships with customers and suppliers.
Teaching Tips:
In your student teams, choose one of the three types of goods and services we just discussed. Please provide a brief description to the class about two examples of your choice.
Answers will vary.
© 2009 Pearson Education, Inc.

13. Goods, Services, and Ideas
Services: Products with intangible (nonphysical) features
Service marketing is used to inform the public about these intangibles.
Relationship Marketing
Emphasizes building lasting relationships with customers and suppliers: results, customer satisfaction and retention.
Marketing products includes goods, services and ideas.
Consumer goods are tangible goods that consumers may buy for personal use.
Consumer marketing is used to inform people about these goods.
Industrial goods are physical items used by companies to produce other products.
Industrial Services are products with intangible or nonphysical features.
Service marketing is used to inform the public about these intangibles.
Relationship marketing emphasizes building lasting relationships with customers and suppliers.
Teaching Tips:
In your student teams, choose one of the three types of goods and services we just discussed. Please provide a brief description to the class about two examples of your choice.
Answers will vary.
© 2009 Pearson Education, Inc.

14. Relationship Marketing
It is important to record any information you can obtain about your customers’ purchasing habits.
Data Warehousing and Data Mining are used for Building Customer Relationships
When managing multiple customer relationships, it is important to record any information you can obtain about your customers’ purchasing habits.
Data warehousing and data mining are used for building customer relationships and maintaining this information. Data warehousing is the compiling and storage of consumer data. Data mining is automating the massive analysis of data by using computers and software programs to sift, sort, and search for previously undiscovered clues about what customers look at, react to, and how they might be influenced.
Teaching Tips:
In your student teams, please think of an example of how customer data might be used, say, for example, by a car dealership, a grocery store chain, or a textbook manufacturer.
Answers will vary, but should explain how, through the use of customer relationship management software, companies like car dealers, grocery stores, etc., can maintain records of purchase and patterns of purchase and continue to remain in contact with their customers about the information.
© 2009 Pearson Education, Inc.

15. Relationship Marketing
Data warehousing: The compiling and storage of consumer data
Data mining: Automating the massive analysis of data by using computers to sift/select, sort, and search for previously undiscovered clues about what customers look at, react to, and how they might be influenced
When managing multiple customer relationships, it is important to record any information you can obtain about your customers’ purchasing habits.
Data warehousing and data mining are used for building customer relationships and maintaining this information. Data warehousing is the compiling and storage of consumer data. Data mining is automating the massive analysis of data by using computers and software programs to sift, sort, and search for previously undiscovered clues about what customers look at, react to, and how they might be influenced.
Teaching Tips:
In your student teams, please think of an example of how customer data might be used, say, for example, by a car dealership, a grocery store chain, or a textbook manufacturer.
Answers will vary, but should explain how, through the use of customer relationship management software, companies like car dealers, grocery stores, etc., can maintain records of purchase and patterns of purchase and continue to remain in contact with their customers about the information.
© 2009 Pearson Education, Inc.

16. The Marketing Environment
Marketing strategies are not determined unilaterally by any business- they are influenced by powerful forces. They include:
Political-legal environment
Sociocultural environment
Technological environment
Economic environment
Competitive environment
Substitute products
Brand competition
International competition
As we discussed in earlier sessions, the external business environment is important for firms. The external marketing environment plays a big role in the marketing of products and services as well.
Let’s look at the external marketing environment. It includes the:
Political-legal environment.
Sociocultural environment.
Technological environment.
Economic environment.
Competitive environment.
This can include substitute products, brand competition and international competition.
Teaching Tips:
In your student teams, choose one of the five external marketing environments. Then please develop two examples of how factors within that external environment could impact the marketer of the product or service you discussed in your teams a few moments ago.
Answers will vary but will include elements from our prior chapter discussion about external business environments.
© 2009 Pearson Education, Inc.

17. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix.
Any business needs to develop a strategy for each of the elements in the marketing mix. Therefor they develop marketing plan for each of the 4 ps.
Marketing Plan
A detailed strategy for focusing marketing efforts on consumer needs and wants
In planning business develops the Marketing Mix: 4 Ps
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

18. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product: Marketing begins with a product -a good, a service, or an idea designed to fill a consumer need or want. Meeting consumer needs is a constant challenge,
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

19. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product differentiation is the creation of a feature or image that makes a product differ enough from competitive products to attract consumers.
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

20. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty. Developing a product is a challenge, why?
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

21. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Price: Selecting the best pricing strategy at which to sell a product.
Price include: cost + profit margin.
Price has to be convenient to customer. Price should be competitive.
What are the factors influence price?
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

22. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Marketing Mix: 4 Ps
Place: Distributing a product through the proper channels.
Inventory and warehousing control and use of transportation are part of distribution.
Many manufacturers sell goods to other companies , which in turn distribute them to retailers. Others sell directly to major retailers or direct to final consumer.
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

23. What Is Marketing? (cont’d)
Strategy to develop The Marketing Mix
Marketing Mix: 4 Ps
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion (trade show, coupon, free sample), public relations, personal selling, etc.
In order to sell our products and services, we must develop a strategy for each of the elements in the marketing mix. A marketing plan is developed for our product or service, which is a detailed strategy for focusing marketing efforts on consumer needs and wants.
The elements of the marketing mix include:
Product: Differentiating the product, positioning it in the marketplace, packaging the product and providing a product warranty.
Price: Selecting the best pricing strategy at which to sell a product. The lowest cost for which we can successfully sell a product is its cost and the highest price for which we can sell a product is what the market will pay.
Place: Distributing a product through the proper channels to get to the consumer.
Promotion: Communicating information about a product to its potential consumers. This includes advertising, sales promotion, public relations, etc.
Teaching Tips:
In your student teams, please once again refer back to the product or service you used as an example earlier in this class session. Please describe that product in terms of each of the four elements of the marketing mix. We will share our answers with the class.
Answers will vary, but should relate to the basic information provided about the 4 Ps.
© 2009 Pearson Education, Inc.

24. Four Cs:
The sellers' four Ps are a mirror image of the buyers' four Cs: customer solution (product), customer cost (price), customer convenience (place), and customer communication (promotion).
Together, these elements are known as the marketing mix.

25. Discussion
Give examples about Advertising, sales promotion

26. Group work
I need to buy Toyota car , I prefer silver color. The problem I don’t have enough money to pay. I may borrow from bank, it will cost me 20000$. In addition, I am unsure where to buy from, though I heard about the product from radio. Question: identify the marketing mix .

27. Marketing mix:
product: car- color- brand Toyota- differentiation. Price: 20,000, borrowing- best value strategy. Place: unclear, may be from agent or car dealer. Promotion: radio advertising.

28. 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.
Selecting the target group is first step in marketing strategies. Why?
The target marketing requires market segmentation.
e.g., Hyundai offers automobiles with various features at various prices.
Target market identification and market segmentation are two extremely important topics for any marketer.
A target market includes groups of people with similar wants and needs who can be expected to show interest in the same products.
Market segmentation is achieved by dividing a market into categories of customer types or segments. These can include:
Geographic: Areas of a country or region where buyers are located.
Demographic: Statistical information about age, income, sex, race, education, etc.
Psychographic: Values, attitudes and lifestyles of a consumer or group of consumers.
Teaching Tips:
In your student teams, please prepare a basic target market and market segmentation description for the product you have been using as your example today.
Answers will vary but should seem reasonable based on the information presented in this slide.
© 2009 Pearson Education, Inc.

29. Target Marketing and Market Segmentation
Dividing a market into categories of customer types or “segments”.
Market segment must share common traits that affect their purchasing decisions.
Target market identification and market segmentation are two extremely important topics for any marketer.
A target market includes groups of people with similar wants and needs who can be expected to show interest in the same products.
Market segmentation is achieved by dividing a market into categories of customer types or segments. These can include:
Geographic: Areas of a country or region where buyers are located.
Demographic: Statistical information about age, income, sex, race, education, etc.
Psychographic: Values, attitudes and lifestyles of a consumer or group of consumers.
Teaching Tips:
In your student teams, please prepare a basic target market and market segmentation description for the product you have been using as your example today.
Answers will vary but should seem reasonable based on the information presented in this slide.
© 2009 Pearson Education, Inc.

30. Segmentation variables:
Geographic: Areas of a country or region where buyers are located. E.g., Urban areas do not need agricultural equipments. Also Sailboats sell better along coasts.
Demographic: Statistical information about age, income, sex, race, education, etc.
Psychographic: Values, attitudes and lifestyles of a consumer or group of consumers, e.g., family size affect size and type of purchasing.
Target market identification and market segmentation are two extremely important topics for any marketer.
A target market includes groups of people with similar wants and needs who can be expected to show interest in the same products.
Market segmentation is achieved by dividing a market into categories of customer types or segments. These can include:
Geographic: Areas of a country or region where buyers are located.
Demographic: Statistical information about age, income, sex, race, education, etc.
Psychographic: Values, attitudes and lifestyles of a consumer or group of consumers.
Teaching Tips:
In your student teams, please prepare a basic target market and market segmentation description for the product you have been using as your example today.
Answers will vary but should seem reasonable based on the information presented in this slide.
© 2009 Pearson Education, Inc.

31. PRODUCT POSITIONING
PRODUCT POSITIONING : The establishment of an easily identifiable image of a product in the minds of consumers.
Product positioning is based on the important attributes that consumers use to assess the product. For example, a low-priced car like a Ford Focus tends to be positioned on the basis of economy,
while a Porsche is positioned in terms of high performance.

32. TABLE 11.1 Demographic Variables
Let’s look at the elements of demographic variables for segmenting markets.
As you can see from this table, demographics include age, education, family life cycle, family size, income, nationality, race, religion and sex.
Please notice how the table breaks the age groups into ranges. These can vary based on the marketer, but are an example of how you would segment by age group. The same applies to the income statistic.
Teaching Tips:
In your student teams, please refer again to your product or service you have been using as an example. Please prepare a detailed demographic segmentation analysis based on the information on this slide. We will share our descriptions with the class.
Answers will vary by product but should include each of the above elements.
© 2009 Pearson Education, Inc.

33. Case study
I decided to buy a suit for my self. I wondered where to go. At the end I went to men’s wear shop. The shop specialized in selling suits for men only, specially matured of age over 20 years. Question: identify the segmentation categories in this case.

34. Market Research
Which is the study of what buyers need and how best to meet those needs, can address any element In the marketing mix.
Market research can greatly Improve the accuracy and effectiveness of market segmentation.

35. The Research Process
Indentifying the needs & wants to be satisfied. Study the current situation. What is the need and what Is currently being done to meet It.
Select a research method. In choosing a method, marketers must bear in mind the effectiveness and costs of different methods. The four basic types : observation, survey, focus groups, and experimentation.

36. The Research Process
Collect data. Secondary data are information already available as a result of previous research by the firm or other organizations. Primary data-new research by the firm or its agent&-must be obtained.
Analyze the data.
Prepare a report. This report normally includes a summary, methodology and findings, various alternative solutions (where appropriate), and recommendations.

37. Understanding Consumer Behavior
It is important that we understand how and why consumers behave the way they do when making purchases.
There are four influences on consumer behavior. These include:
Psychological influences: These influences can include a person’s values, attitudes ability to learn. E.g., he prefers to buy some products because he like them.
Let’s take a look at consumer behavior. It is important that we understand how and why consumers behave the way they do when making purchases.
There are four influences on consumer behavior. These include:
Psychological influences: These influences can include a person’s values, attitudes or lifestyle.
Personal influences: These influences can include personal preferences based on personality.
Social influences: These influences can include social status, having the latest or greatest version of an item.
Cultural influences: These influences can include behaviors or beliefs specific to one’s cultural heritage.
In addition, the concept of brand loyalty is important. Brand-loyal customers are those who regularly purchase products because they are satisfied with the products’ performance.
Teaching Tips:
In your student teams, please once again reflect back on your product or service example you have been using during this class. Please determine which of the factors we have just discussed influence your behavior as a consumer. What other factors might influence other consumers to buy or use your example product or service? We will share our examples with the class.
Answers will vary but should directly relate back to the four influences on consumer behavior.
© 2009 Pearson Education, Inc.

38. Understanding Consumer Behavior
2. Personal influences: These influences can include personal preferences based on personality, life style, life-cycle, economic status (income). (demographic)
3. Social influences: These influences can include social status, having the latest or greatest version of an item. E.g., influence of reference groups such as friends
4. Cultural influences: These influences can include behaviors or beliefs specific to one’s cultural heritage. E.g., the cultural ranking of groups according to criteria such as background, occupation, religion and income. E.g., Muslims buy halal meat.
Let’s take a look at consumer behavior. It is important that we understand how and why consumers behave the way they do when making purchases.
There are four influences on consumer behavior. These include:
Psychological influences: These influences can include a person’s values, attitudes or lifestyle.
Personal influences: These influences can include personal preferences based on personality.
Social influences: These influences can include social status, having the latest or greatest version of an item.
Cultural influences: These influences can include behaviors or beliefs specific to one’s cultural heritage.
In addition, the concept of brand loyalty is important. Brand-loyal customers are those who regularly purchase products because they are satisfied with the products’ performance.
Teaching Tips:
In your student teams, please once again reflect back on your product or service example you have been using during this class. Please determine which of the factors we have just discussed influence your behavior as a consumer. What other factors might influence other consumers to buy or use your example product or service? We will share our examples with the class.
Answers will vary but should directly relate back to the four influences on consumer behavior.
© 2009 Pearson Education, Inc.

39. Understanding Consumer Behavior
Brand Loyalty
Consumers who regularly purchase products because they are satisfied with their performance
Let’s take a look at consumer behavior. It is important that we understand how and why consumers behave the way they do when making purchases.
There are four influences on consumer behavior. These include:
Psychological influences: These influences can include a person’s values, attitudes or lifestyle.
Personal influences: These influences can include personal preferences based on personality.
Social influences: These influences can include social status, having the latest or greatest version of an item.
Cultural influences: These influences can include behaviors or beliefs specific to one’s cultural heritage.
In addition, the concept of brand loyalty is important. Brand-loyal customers are those who regularly purchase products because they are satisfied with the products’ performance.
Teaching Tips:
In your student teams, please once again reflect back on your product or service example you have been using during this class. Please determine which of the factors we have just discussed influence your behavior as a consumer. What other factors might influence other consumers to buy or use your example product or service? We will share our examples with the class.
Answers will vary but should directly relate back to the four influences on consumer behavior.
© 2009 Pearson Education, Inc.

40. FIGURE 11.1 The Consumer Buying Process
Problem\Need Recognition
Information Seeking
Evaluation of Alternatives
Now let’s examine the consumer buying process. You will see across the top of this figure are the four factors we just reviewed, which include personal and environmental factors. At the bottom we see the four marketing factors, product, pricing, promotion and place.
In the middle are the stages in the consumer buying process. Let’s review these:
First the problem/need recognition occurs. An example is we see that our shoes are worn out or ripping, and we need to replace them.
Second we begin our information-seeking behavior. This includes searching in stores, looking at different styles and prices and, of course, asking for the opinions of others.
Next we conduct an evaluation of alternatives. Which shoes are comfortable? Affordable? How will others react to them?
We finally make our purchase decision, choosing rationally or emotionally which pair of shoes we will buy.
After our purchase, we engage in post-purchase evaluation. Here we observe the reactions of others to our purchase, we test the durability of our shoes and we compare the new shoes to the old ones.
Please note how the personal and environmental factors play into the evaluation of alternatives as do the four Ps or factors of marketing.
Teaching Tips:
In our student teams, please use the model to describe the consumer buying process for your example product. We will share our application of this model for our team examples with the class.
Answers will vary, but be sure that each step is addressed.
© 2009 Pearson Education, Inc.

41. Organizational Marketing and Buying Behavior
Organizational Markets 3 types:
Industrial Markets
Businesses that buy goods to be converted into other products or that are used up during production (equipment, raw materials).
Organizational marketing and buying behavior differs from consumer marketing and buying behaviors. Organizational markets include three different groups:
Industrial markets: Businesses that buy goods to be converted into other products or goods 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, as well as non-governmental organizations
Teaching Tips:
In your student teams, please come up with two examples of organizational markets and describe them. Also, please come up with an example product or service each of the two example markets might purchase.
Answers will vary.
© 2009 Pearson Education, Inc.

42. Organizational Marketing and Buying Behavior
Organizational Markets 3 types:
Reseller Markets
Intermediaries, including wholesalers and retailers, that buy and resell finished goods
Government and Institutional Markets
Federal and state governments
Nongovernmental organizations
Organizational marketing and buying behavior differs from consumer marketing and buying behaviors. Organizational markets include three different groups:
Industrial markets: Businesses that buy goods to be converted into other products or goods 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, as well as non-governmental organizations
Teaching Tips:
In your student teams, please come up with two examples of organizational markets and describe them. Also, please come up with an example product or service each of the two example markets might purchase.
Answers will vary.
© 2009 Pearson Education, Inc.

43. 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
Now let’s examine organizational buying behavior. Let’s begin by looking at the differences in buyers.
Organizational buyers are professionals who negotiate the buyer-seller agreement or purchase terms.
They are generally specialists in purchasing a line of items.
They are experts about the products they have purchased.
The differences in buyer-seller relationships in organizational markets versus consumer markets include the following:
Organizational buyers usually make frequent purchases.
Organizational buyers form enduring long-term relationships.
Buyers and sellers in organizational markets may work closely.
Organizational marketing also puts a heavy emphasis on personal selling.
Teaching Tips:
For your example organizational product or service, please describe what the organizational buying process entails. We will share our answers with the class.
Answers will vary but should reflect back to the differences just discussed in this slide.
© 2009 Pearson Education, Inc.

44. Group work
Draw example on Government and Institutional Markets in Gaza

45. Organizational Buying Behavior
The differences in buyer-seller relationships in organizational markets versus consumer markets include the following:
Organizational buyers usually make frequent purchases.
Organizational buyers form enduring long-term relationships.
Buyers and sellers in organizational markets may work closely.
Organizational marketing also puts a heavy emphasis on personal selling.
Now let’s examine organizational buying behavior. Let’s begin by looking at the differences in buyers.
Organizational buyers are professionals who negotiate the buyer-seller agreement or purchase terms.
They are generally specialists in purchasing a line of items.
They are experts about the products they have purchased.
The differences in buyer-seller relationships in organizational markets versus consumer markets include the following:
Organizational buyers usually make frequent purchases.
Organizational buyers form enduring long-term relationships.
Buyers and sellers in organizational markets may work closely.
Organizational marketing also puts a heavy emphasis on personal selling.
Teaching Tips:
For your example organizational product or service, please describe what the organizational buying process entails. We will share our answers with the class.
Answers will vary but should reflect back to the differences just discussed in this slide.
© 2009 Pearson Education, Inc.

46. Discussion
Who can describe the buying behavior of supermarket in relation with a wholesale, in light of the previous slide.

47. What Is a Product? Product Defined Product Features Benefits
A value package/set 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
What is a product?
A definition of a product is a value package that provides a bundle of benefits and features to satisfy the needs and wants of customers.
Product features are tangible and intangible qualities built into a product.
Product benefits are the tangible and intangible outcomes associated with acquisition or use of a product.
Teaching Tips:
Looking back in your teams to your example consumer product or service you discussed earlier, please describe a feature and a benefit of that product or service. We will share our examples with the class.
Answers will vary but should relate back to the definitions above about product features and benefits.
© 2009 Pearson Education, Inc.

48. TABLE 11.2 Categories of Consumer Products
There are three basic categories of consumer products. These include:
Convenience goods and services
These are consumed rapidly and regularly
They are inexpensive
They are purchased often and with little input of time and effort.
Examples: Milk, newspapers or fast food.
Shopping goods and services:
These goods and services are purchased less often
They are more expensive
Consumers may shop around and compare products based on style, performance, color, price and other criteria
Examples include: TVs, tires or car insurance
Specialty goods and services:
These are good or services that are purchased infrequently
They are expensive
The consumer decides on a precise product and will not accept substitutions and spends a good deal of time choosing the “perfect” item
Examples: Jewelry, wedding gown and catering
Teaching Tips:
In our student teams, please examine your consumer good or service and decide in which category it belongs. We will share our examples with the class. Be sure to explain why it fits in a specific category.
Answers will vary but should directly relate back to the descriptions above.
© 2009 Pearson Education, Inc.

49. TABLE 11.3 Industrial Products
It is also important to understand the two basic categories of industrial products.
Expense items: Goods or services that are consumed within a year by firms producing other goods or supplying other services.
Examples include: Loads of tea processed into tea bags
Oil and electricity for machines
Capital items: Permanent (expensive and long-lasting) goods and services, with a life expectancy of more than a year, which are purchased infrequently, so transactions often involve decisions by high-level manager.
Examples include: Buildings, offices and factories
Fixed equipment such as water towers or baking ovens
Accessory equipment such as computers or airplanes
Building maintenance
Legal services
Teaching Tips:
In our student teams, please think back to your example of an industrial product or service. Please discuss into which category does this product or service fit: Expense or capital? Be sure to provide reasons as to why you believe your example fits into either category.
Answers will vary but should relate directly back to the descriptions provided here.
© 2009 Pearson Education, Inc.

50. The Product Mix Product Mix Product Line
The group of products (consumer, industrial, or both) that a company makes available for sale. E.g., IUG products.
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.
The product mix is the group of products—consumer, industrial or both—that a company makes available for sale.
A product line is 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.
Teaching Tips:
In your student teams, please list an example of a product line for a consumer products company. We will share our example with the class.
Answers will vary but should address the definition of a product line we have just reviewed.
© 2009 Pearson Education, Inc.

51. Multiple (or Diversified) Product Lines
The Product Mix
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.
Please give an example of a product line for a consumer products company
The product mix is the group of products—consumer, industrial or both—that a company makes available for sale.
A product line is 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.
Teaching Tips:
In your student teams, please list an example of a product line for a consumer products company. We will share our example with the class.
Answers will vary but should address the definition of a product line we have just reviewed.
© 2009 Pearson Education, Inc.

52. 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
The new product development process is a vital part of a company’s success—and its ability to remain successful in the marketplace.
Let’s examine the new product development process:
Research and development, or R & D, involves setting up a department for exploring new product ideas.
Product mortality rates are high. Few product ideas (1 in 50) actually reach the market.
Speed to market means responding to customer demand or market changes by introducing new products to the market ahead of competitors.
Teaching Tips:
In your student teams, please recall again your consumer product examples. Please discuss another product that could be produced by the sponsoring company to improve or better the current product. We will share our examples with the class.
Answers will vary but should address changing customer or market demand, as well as the actions of competitors.
© 2009 Pearson Education, Inc.

53. FIGURE 11.2 Products in the Life Cycle: Stages, Sales, Cost and Profit
The product life cycle is an important concept to work with in marketing, especially in terms of:
Product life cycle stages.
Product sales.
Product cost.
Product profit.
Let’s examine the stages in the life cycle of a new product in figure (a) and the sales and costs in figure (b) above:
The first stage is product introduction. In this stage, sales are low, but research and development costs are high. Therefore we will most likely experience a loss as we first introduce the product to market.
An example of a product in this stage is commercial space flights. Very high prices and not much profit.
The growth stage is where our sales are increasing more rapidly as consumers try our product, hear about it, and hence we are able to cover our original costs of research and development and production. We achieve a break-even point during this stage, when sales revenues cross our production costs.
An example of products in this cycle could be the 3G cellular phones with built in GPS tracking, ability to search the Internet and play games, and download and play music and videos.
Next our product moves in the maturity phase of the product life cycle. This is the stage where we start to reap high profits from our product, because we have covered the costs of our production and development.
An example of this type of product might be disposable razors.
Finally, we reach a stage where the product sales decline. We can still earn good profit during this stage, but we need to be working in our R & D department to develop a new and improved product to make up for the declining sales and eventually declining profits.
Examples of products in the decline stage might include rollerblades and film cameras.
Teaching Tips:
In our student teams, please take your idea for a new product and attempt to prepare a basic product life cycle curve. Please draw a graph like the one in figure b above. At what point will your company break even and begin to earn a profit on this new product? We will share our examples with the class.
Answers will vary but must address the elements of product life cycle curves as discussed earlier.
© 2009 Pearson Education, Inc.

54. Identifying Products Branding Products
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. E.g., K cheeze, coca cola.
Identifying, or branding, our products is a very important part of the marketing mix.
Branding is a process of using symbols to communicate the qualities of a particular product made by a particular producer. A brand signals uniform quality and stimulates consumer recall.
Brand loyalty represents a consumer’s preference for a particular product.
Brand awareness is the brand name that comes first to mind when consumers consider a particular product category.
Teaching Tips:
In your student teams, please identify a brand name and symbol for your new consumer product idea we discussed a few moments ago. We will share our examples with the class.
Answers will vary.
© 2009 Pearson Education, Inc.

55. Branding Products Consumer preference for a particular product
Identifying Products
Branding Products
Consumer preference for a particular product
Brand awareness
The brand name that comes first to mind when consumers consider a particular product category
Identifying, or branding, our products is a very important part of the marketing mix.
Branding is a process of using symbols to communicate the qualities of a particular product made by a particular producer. A brand signals uniform quality and stimulates consumer recall.
Brand loyalty represents a consumer’s preference for a particular product.
Brand awareness is the brand name that comes first to mind when consumers consider a particular product category.
Teaching Tips:
In your student teams, please identify a brand name and symbol for your new consumer product idea we discussed a few moments ago. We will share our examples with the class.
Answers will vary.
© 2009 Pearson Education, Inc.

56. Identifying Products (cont’d)
Gaining Brand Awareness: Requires several methods of promotion including:
1 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. E.g., when people drinking coca cola during football game TV watching.
Gaining brand awareness takes the implementation of several elements of promotion. Let’s examine them:
Product placement
This is 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 is a form of word-of-mouth marketing.
“What’s the buzz about that new tennis shoe?”
Viral marketing relies on word-of-mouth and the Internet to spread information like a “virus” from person-to-person about products and ideas.
Teaching Tips:
In your student teams, please choose one of these three methods for gaining brand awareness. Then please provide two examples of your chosen promotional element. We will share our answers with the class.
Answers will vary, but should focus back to the definitions of these elements.
© 2009 Pearson Education, Inc.

57. Gaining Brand Awareness
Requires several methods of promotion including:
2 Buzz marketing
A form of word-of-mouth marketing. They give sample to people and ask them to tell friends about it.
3 Viral marketing
Form of Buzz marketing that relies on Internet to spread information like a “virus” from person-to-person about products and ideas
Gaining brand awareness takes the implementation of several elements of promotion. Let’s examine them:
Product placement
This is 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 is a form of word-of-mouth marketing.
“What’s the buzz about that new tennis shoe?”
Viral marketing relies on word-of-mouth and the Internet to spread information like a “virus” from person-to-person about products and ideas.
Teaching Tips:
In your student teams, please choose one of these three methods for gaining brand awareness. Then please provide two examples of your chosen promotional element. We will share our answers with the class.
Answers will vary, but should focus back to the definitions of these elements.
© 2009 Pearson Education, Inc.

58. 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
Product packages are an import part of the product element of the marketing mix. The purposes of packaging include:
Reducing the risk of damage, breakage or spoilage.
Increasing the difficulty of stealing small products.
Serving as in-store advertisement that makes the product attractive.
Displaying the brand name.
Identifying features and benefits of the product.
Enhancing the utility of the product features and benefits.
Teaching Tips:
In your student teams, please think back to your consumer product example from earlier in this chapter. Please describe the type of packaging that product comes in, and relate it to the purposes of packaging we have just discussed. We will share our answers with the class.
Answers will vary but should relate to the purposes of packaging just discussed.
© 2009 Pearson Education, Inc.

59. Packaging Products Purposes of packaging Displays the brand name
Identifies features and benefits
Enhances the utility of the product features and benefits
Product packages are an import part of the product element of the marketing mix. The purposes of packaging include:
Reducing the risk of damage, breakage or spoilage.
Increasing the difficulty of stealing small products.
Serving as in-store advertisement that makes the product attractive.
Displaying the brand name.
Identifying features and benefits of the product.
Enhancing the utility of the product features and benefits.
Teaching Tips:
In your student teams, please think back to your consumer product example from earlier in this chapter. Please describe the type of packaging that product comes in, and relate it to the purposes of packaging we have just discussed. We will share our answers with the class.
Answers will vary but should relate to the purposes of packaging just discussed.
© 2009 Pearson Education, Inc.

60. The International Marketing Mix
International products: Products sold internationally need to adapt to the needs of consumers in the foreign market.
International pricing: There will probably be higher transportation and selling costs abroad, but pricing cannot be raised just for this reason. A marketer needs to take into account the income of the consumers, currency exchange rates and competitive pricing.
The international marketing mix is more important today than ever before. Let’s look at each of the international marketing mix elements:
International products: Products that are sold internationally need to adapt to the needs of consumers in the foreign market.
International pricing: There will probably be higher transportation and selling costs abroad, but pricing cannot be raised just for this reason. A marketer needs to take into account the income of the consumers in the new country and the product’s fit within the marketplace in terms of currency exchange rates and competitive pricing.
International distribution: The company needs access to a distribution network in foreign markets. For example, in many parts of the world the super or hyper market concept is new and only exists within major cities. How will the company distribute and sell its products in the outlying areas of a country?
International promotion: Promotion requires cultural sensitivity and hence adjustments to the marketing mix in each market.
Teaching Tips:
In your student teams, imagine that your company has decided to expand your example consumer product you have been discussing today into an international market. Please describe how you might have to change the four marketing mix elements to be successful with this product in an international market.
Answers will vary but should address the situations discussed above.
© 2009 Pearson Education, Inc.

61. The International Marketing Mix
International distribution: access to a distribution network in foreign markets. For example, in many parts of the world the super or hyper market concept is new and only exists within major cities. How will the company distribute and sell its products in the outlying/remote areas of a country?
International promotion: Promotion requires cultural sensitivity and hence adjustments to the marketing mix.
The international marketing mix is more important today than ever before. Let’s look at each of the international marketing mix elements:
International products: Products that are sold internationally need to adapt to the needs of consumers in the foreign market.
International pricing: There will probably be higher transportation and selling costs abroad, but pricing cannot be raised just for this reason. A marketer needs to take into account the income of the consumers in the new country and the product’s fit within the marketplace in terms of currency exchange rates and competitive pricing.
International distribution: The company needs access to a distribution network in foreign markets. For example, in many parts of the world the super or hyper market concept is new and only exists within major cities. How will the company distribute and sell its products in the outlying areas of a country?
International promotion: Promotion requires cultural sensitivity and hence adjustments to the marketing mix in each market.
Teaching Tips:
In your student teams, imagine that your company has decided to expand your example consumer product you have been discussing today into an international market. Please describe how you might have to change the four marketing mix elements to be successful with this product in an international market.
Answers will vary but should address the situations discussed above.
© 2009 Pearson Education, Inc.

62. 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
Equally as important as the international marketing mix elements are the small business marketing mix elements.
Let’s examine the four Ps in terms of small business marketing:
Small-business products: It is extremely important for small business to keep a close watch on its products, since product failures can occur due to a lack of market potential for the product or due to marketing the new product to the wrong target market segments.
Small-business pricing: Losses can mount up due to pricing errors resulting from underestimating operating expenses.
Small-business distribution: Location is all-important for a small business. Poor location choice can fail to attract customers.
Small-business promotion: Budget and funding is a key issue in this element. Careful promotion can reduce expenses.
Teaching Tips:
In your student teams, please choose a small business with which you are familiar or that you frequent. Please describe the 4Ps in light of our discussion in relation to a product or service offered by a small business.
Answers will vary but should address the points made above.
© 2009 Pearson Education, Inc.

63. Small Business and the Marketing Mix
Small-Business Distribution
Poor location choice fails to attract customers
Small-Business Promotion
Careful promotion can reduce expenses. It requires budget.
Equally as important as the international marketing mix elements are the small business marketing mix elements.
Let’s examine the four Ps in terms of small business marketing:
Small-business products: It is extremely important for small business to keep a close watch on its products, since product failures can occur due to a lack of market potential for the product or due to marketing the new product to the wrong target market segments.
Small-business pricing: Losses can mount up due to pricing errors resulting from underestimating operating expenses.
Small-business distribution: Location is all-important for a small business. Poor location choice can fail to attract customers.
Small-business promotion: Budget and funding is a key issue in this element. Careful promotion can reduce expenses.
Teaching Tips:
In your student teams, please choose a small business with which you are familiar or that you frequent. Please describe the 4Ps in light of our discussion in relation to a product or service offered by a small business.
Answers will vary but should address the points made above.
© 2009 Pearson Education, Inc.