1. Chapter 1 Introduction: Diversity in the Marketplace

2. ©2000 Prentice Hall Consumer Research Methodology used to study consumer behavior.

3. ©2000 Prentice Hall Market Segmentation The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

4. ©2000 Prentice Hall Personal Consumer The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. (Also referred to as the Ultimate Consumer or End User.)

5. ©2000 Prentice Hall Organizational Consumer A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

6. ©2000 Prentice Hall Consumer Behavior as an Academic Discipline and an Applied Science Factors that contributed to the growing interest in consumer behavior: –accelerated rate of new product development –consumer movement –public policy concerns –environmental concerns –the opening of national markets throughout the world

7. ©2000 Prentice Hall Consumer Behavior The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products, services, and ideas.

8. ©2000 Prentice Hall The Marketing Concept To be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition.

9. ©2000 Prentice Hall Marketing Concept A consumer-oriented philosophy that suggests that satisfaction of consumer needs provides the focus for product development and marketing strategy to enable the firm to meet its own organizational goals.

10. ©2000 Prentice Hall The Scope of Consumer Behavior How do individuals make decisions to spend their resources (time, money, effort). –Includes: what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how often they use it. How do individuals dispose of their once-new purchases. –Includes: do they store it, throw it or give it away, sell it, rent it, or lend it out?

11. ©2000 Prentice Hall Consumer Behavior’s Interdisciplinary Roots Consumer Behavior borrows from psychology, sociology, social psychology, anthropology. All factors combine to form a comprehensive model that reflects both the cognitive and emotional aspects of consumer decision making.

12. ©2000 Prentice Hall A Simplified Model of Consumer Decision Making The decision-making process can be viewed as three interlocking stages: –The input stage: marketing efforts sociological influences –The process stage: psychological factors –The output stage: purchase behavior postpurchase evaluation

13. ©2000 Prentice Hall Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture Output Process Input External Influence Consumer Decision Making Postdecision Behavior Postpurchase Evaluation Purchase 1. Trial 2. Repeat purchase Need Recognition Prepurchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience Figure 1-1 A Simple Model of Consumer Decision Making

14. ©2000 Prentice Hall Ethics in Marketing Unethical practices occur at every level of the marketing mix: –in the design of the products, in packaging, in pricing, in advertising, and in distribution There are two different types of theories: –teleological theories and deontological theories

15. ©2000 Prentice Hall TYPES OF UNETHICAL MARKETING BEHAVIOR EXAMPLES PRODUCT SafetyManufacture of flammable stuffed animals Shoddy goodsProducts that cannot withstand ordinary wear and tear Inadequate warrantiesWarranties with insufficient time or parts coverage Environmental pollutionDumping hazardous wastes Mislabeled productsFlavored sugar water sold as apple juice for babies DevelopmentBribery of FDA officials to secure agency approval of generic pharmaceuticals ManufacturingUnauthorized substitutions in generic drugs after FDA approval Brand “knock-offs”Counterfeit branded goods sold as genuine brands PRICE Excessive markupsHigh prices used by retailers to connote quality Price differentiationYield-management pricing of airline tickets, resulting in day-to-day differential pricing of adjacent seats Price discriminationFavored pricing to preferred racial or ethnic groups PACKAGING Deceptive quantitiesSome marketers use “packaging-to-price” tactics that mask a decrease in product quantity while maintaining the same price and traditional product size Table 1.1 Unethical Marketing Behavior

16. ©2000 Prentice Hall PROMOTION Exaggerated claimsRazor blade manufacture advertises that its razors offered “the closest shave known to man” Tasteless advertisingSexual innuendoes and gender disparagement Inappropriate targetingInner-city billboards for luxury products Deceptive advertisingAds for cereal claiming it prevents heart disease Persuasive role modelsCelebrity spokespersons in beer, liquor, or cigarette ads targeted to for inappropriate youths products Naïve audiencesBillboards for cigarettes and alcohol in poor urban neighborhoods, where many people are dying from related causes Ads on children’s TV for nutritionally unsound products Captive audiencesMandatory viewing of TV commercials by students in schools subscribing to closed channel newscasts TelemarketingOffers of fabulous prizes in return for credit-card purchases of touted goods DISTRIBUTION Fraudulent salesPhony markdowns based on “kited” retail list prices Bait-and-switch tacticsLuring consumers with ads for low-priced merchandise and switching them to higher-priced models Direct marketingDeceptive, misleading product size and performance claims Table 1.1 continued

17. ©2000 Prentice Hall Shoplifting Switching price tags Returning clothing that has been worn Abusing products and returning them as damaged goods Redeeming coupons without the requisite purchase Redeeming coupons that have expired Returning products bought at sale and demanding the full-price refund Sealing belts from store clothing Cutting buttons off store merchandise Returning partially used products for full store credit Abusing warranty or unconditional guarantee privileges Damaging merchandise in a store and then demanding a sales discount Duplicating copyrighted materials without permission Table 1.2 Unethical Consumer Practices

18. ©2000 Prentice Hall Teleology An ethical philosophy which considers the moral worth of a behavior as determined by its consequences.

19. ©2000 Prentice Hall Utilitarianism A teleological theory summarized best by the idea of “the greatest good for the greatest number.”

20. ©2000 Prentice Hall Deontology An ethical philosophy that places greater weight on personal and social values than on economic values.

21. ©2000 Prentice Hall Ethics and Social Responsibility Corporate Codes of Ethics Trade Associations Codes of Ethics Mission-Based Social Goals

22. ©2000 Prentice Hall Figure 1.2 Example of a Company Policy Statement Stressing Social Responsibility

23. ©2000 Prentice Hall The Societal Marketing Concept All companies prosper when society prospers. Companies as well as individuals, would be better off it social responsibility was an integral component of every marketing decision. Requires all marketers adhere to principles of social responsibility in marketing of their goods and services.

24. ©2000 Prentice Hall Societal Marketing Concept A revision of the traditional marketing concept that suggests that marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole.