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Bmgt 411 week4

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  • 1. BMGT 411: Week #4 Kottler: Chapters 5 - Consumer Markets Chapter 6 - Business Markets Chapter 7 - Marketing Segments and Targets Wood: Chapter 3 - Markets and Consumers Chapter 4 - Segmenting, Targeting and Positioning 1
  • 2. BMGT 411: Chapter 5 Analyzing Consumer Markets 2
  • 3. Chapter Questions • How do consumer characteristics influence buying behavior? • What major psychological processes influence consumer responses to marketing? • How do marketers analyze consumer decision making? 3
  • 4. What Influences Consumer Behavior? • Consumer behavior—the study of how individuals, groups, and organizations select, buy, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires. • Influences: • Cultural factors • Social factors • Personal factors 4
  • 5. Cultural Factors • Culture is the most fundamental determinant of a person’s wants and behavior. • Consists of subcultures that provide more specific identification and socialization for their members. • Social class—relatively homogeneous and enduring divisions in a society. 5
  • 6. Social Classes • Upper uppers • Lower uppers • Upper middles • Middle class • Working class • Upper lowers • Lower lowers 6
  • 7. Income Gap in the US 7
  • 8. Citi Hourglass Theory 8
  • 9. P&G High/Low 9
  • 10. Social Factors • Reference groups—consist of all of the groups that have a direct or indirect influence on a person’s attitudes or behavior. • Membership groups (primary and secondary)—groups having direct influence: family, friends, co-workers, neighbors • Aspirational groups—those a person hopes to join • Dissociative groups—those whose values or behavior an individual rejects • Opinion leader—the person who offers informal advice or information about a specific product or product category. 10
  • 11. Social Media Opinion Leaders 11
  • 12. Personal Factors • Age • Life cycle stage • Occupation • Economic circumstances • Personality • Self-concept • Lifestyles • Values 12
  • 13. Key Psychological Processes • Motivation • Perception • Learning • Memory 13
  • 14. Key Psychological Processes • Freud’s Theory • Behavior is guided by subconscious motivations. • Maslow’s Hierarchy of Needs Theory • Human needs are arranged in a hierarchy from most to least pressing— physiological, safety, social, esteem, and self-actualization. • Behavior is driven by lowest unmet need. • Herzberg’s Two-Factor Theory • The absence of dis-satisfiers is not enough to motivate a purchase;satisfiers must be present. 14
  • 15. Figure 5.1 Model of Consumer Behavior 15
  • 16. Perception •Perception—the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. •Selective attention: Consumers can only absorb so much information, that is why targeted marketing is so key for ROI •Selective distortion: Customers may interpret information that fits preconceptions 16
  • 17. Learning • Learning induces changes in our behavior arising from experience • A first positive experience with a brand is key to companies • Drive—a strong internal stimulus that impels action. • Cues—minor stimuli that determine when, where, and how a person responds. 17
  • 18. Five Stage Model of Consumer Buying 18
  • 19. • Use the above matrix to make a buying decision for the following items: • Gas • A new PC • Graduate School • A New Car 19
  • 20. Basic Concepts Underlying the Consumer Evaluation Process • Consumer is trying to satisfy a need. • Consumer is looking for certain benefits. • Consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits to satisfy this need. • Belief—a descriptive thought a person holds about something. • Attitude—enduring favorable or unfavorable evaluations, feelings, and action tendencies toward some object or idea. • Expectancy-value model—consumers evaluate products and services by combining their brand beliefs according to importance. 20
  • 21. BGMT 411: Chapter 6 Analyzing Business Markets 21
  • 22. Boeing 787 Dreamliner, 3 Million Parts, 500 Suppliers 22
  • 23. Chapter Questions • What is the business market, and how does it differ from the consumer market? • What buying situations do organizational buyers face? • Who participates in the business-to-business buying process? 23
  • 24. Chapter Questions • How do business buyers make their decisions? • How can companies build strong relationships with business customers? • How do institutional buyers and government agencies do their buying? 24
  • 25. Local Examples • While these businesses all operate in the B2C Space, many B2B suppliers call on these businesses and need to market to them as well • Can you think of any examples of vendors that would market to these companies? 25
  • 26. Local Examples • IT Solutions • Supplies • Product • Text Books 26
  • 27. What is Organizational Buying? • Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers. 27
  • 28. Characteristics of Business Markets (Page 86) • Fewer, larger buyers • Close supplier-customer relationships • Professional purchasing • Many buying influences • Multiple sales calls • Derived demand • Inelastic demand • Fluctuating demand • Geographically concentrated buyers • Direct purchasing 28
  • 29. Buying Situation • Straight rebuy • Reordering of supplies on a routine basis, usually with current suppliers and automatic reorders • Modified rebuy • The buyer wants to change the product specs, prices, delivery, etc. This usually opens the door to out suppliers • New task • Buys a new product or service for the first time 29
  • 30. Buygrid Framework 30
  • 31. The Buying Center • Initiators: Those who request that something be purchased. • Users: Those who will use the product or service. In many cases, the users initiate the buying proposal. • Influences: People who influence the buying decision by defining specifications and providing information for evaluating alternatives. Technical personnel are particularly important influences. • Decider: People who decide on product requirements and or on suppliers. • Approvers: People who authorize the proposed actions of deciders or buyers. • Buyers: People who have formal authority to select the supplier and arrange the purchase terms. • Gatekeepers: People who have the power to prevent sellers or information from reaching to members of the buying center. e.g. purchasing agents, receptionists, and telephone operators may prevent sales 31
  • 32. Concerns to Business Marketers • Who are the major decision participants? • What decisions do they influence? • What is their level of influence? • What evaluation criteria do they use? 32
  • 33. Stages in the Buying Process: Buy phases 1.Problem recognition: Someone identifies that a problem can be solved by purchasing a new good or service 2.General need description: Buyer determines the items characteristics and quantities needed 3.Product specification: (PVA) Product Value Analysis, reducing the cost to make a product 4.Supplier search: The buyer reaches out to suppliers or auction sites 33
  • 34. Stages in the Buying Process: Buy phases 5.Proposal solicitation: Not all buyers ask for an RFP (Request for Proposals) but government buyers must 6.Supplier selection: Final suppliers selected from the field and chosen by the buying process 7.Order-routine specification: The final order is placed with all details listed •MRO: Maintenance, Repair, Operations 8.Performance review: Evaluating suppliers in a structured process, or less structured, depending on the business 34
  • 35. http:// contracts.patreasury.gov/ search.aspx 35
  • 36. BMGT 411: Chapter 7 Identifying Market Segments and Targets 36
  • 37. http://www.youtube.com/watch? v=ioH2fAv_zes&feature=plcp 37
  • 38. http://www.youtube.com/watch? v=7UnPjNBZS50&feature=plcp 38
  • 39. Chapter Questions • In what ways can a company divide a consumer or business market into segments? • How should a company choose the most attractive target markets? • What are the different levels of market segmentation? 39
  • 40. Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in their needs and preferences • Select one or more market segments to enter • Establish and communicate the distinctive benefits of the market offering 40
  • 41. What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants. 41
  • 42. Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral 42
  • 43. Geographic Segmentation 43
  • 44. Demographic Segmentation • Age and life cycle • Life stage • Gender • Income • Generation • Social class • Race and Culture 44
  • 45. AARP 45
  • 46. Lululemon 46
  • 47. Mercedes Benz 47
  • 48. Psychographic Segmentation and The VALS Framework http:// www.strategicbusinessinsights.c om/vals/ustypes.shtml 48
  • 49. Behavioral Segmentation Based on Needs and Benefits Initiator Influencer Decider Buyer User 49
  • 50. Behavioral Segmentation: Behavioral Variables 1.Occasions: Time of day, week, month, year, or other defined time in a consumers life • Ex: Sheetz Breakfast 2.User Status: Non users, ex users, potential users, first time users, regular users 50
  • 51. Behavioral Segmentation: Behavioral Variables 3.Usage Rate: Light, Medium, and Heavy Product Users 4.Buyer Readiness Stage: Unaware, aware, informed, interested, desire, and intention to buy 5.Loyalty: • Hard Core Loyal's: Always buy one brand • Split Loyal's: Loyal to two or three brands • Shifting Loyal's: Shift from one brand to another • Switchers: Not loyal to any brand 51
  • 52. Behavioral Segmentation: Behavioral Variables •Hard Core Loyal Examples: •Split Loyal's Example: •Shifting Loyal Examples: •Switchers Examples: •Enthusiastic Brands •Positive Brands •Indifferent Brands •Negative Brands •Hostile Brands 52
  • 53. Effective Segmentation Criteria • Measurable: The size, purchasing power, and characteristics of the segment can be measured • Substantial: A segment is large and profitable enough to serve • Accessible: The segments can be effectively reached and served • Differentiable: Distinguishable and respond differently to different marketing mix elements • Actionable: Affective programs can be developed for attracting and serving these segments 53
  • 54. Porter’s 5 Forces Model Threat of Rivalry Threat of Supplier Bargaining Power Threat of Buyer Bargaining Power Threat of New Entrants Threat of Substitutes 54
  • 55. Figure 7.3 Possible Levels of Segmentation 55
  • 56. BMGT 411: Prep for Week 5 • Take the VAL’s Survey and Post your Results to the Blog: http:// www.strategicbusinessinsights.com/vals/presurvey.shtml • Read Chapters: • Kottler: • Chapters 8 - Creating Brand Equity • Chapter 9 - Brand Positioning • Wood: Chapters: 4 (Continued) and 5 56