CHAPTER 11 Understanding Marketing Processes and Consumer Behavior

Outline What Is Marketing? Target Marketing and Market Segmentation Understanding Consumer Behavior Organizational Marketing and Buying Behavior The International Marketing Mix Small Business and the Marketing Mix

What Is Marketing?

Target Marketing and Market Segmentation

Understanding Consumer Behavior

Organizational Marketing and Buying Behavior

The International Marketing Mix

Small Business and the Marketing Mix

What Is Marketing? 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 The 4 P’s of Marketing Product, Price, Promotion and Place.

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

The 4 P’s of Marketing Product, Price, Promotion and Place.

Marketing Goods, Services, & Ideas Consumer Goods Products purchased by consumers for personal use Industrial Goods Products purchased by companies to produce other products Services Intangible products, such as time, expertise, or an activity, that can be purchased Relationship Marketing Marketing strategy that emphasizes lasting relationships with customers and suppliers

Consumer Goods

Products purchased by consumers for personal use

Industrial Goods

Products purchased by companies to produce other products

Services

Intangible products, such as time, expertise, or an activity, that can be purchased

Relationship Marketing

Marketing strategy that emphasizes lasting relationships with customers and suppliers

The Marketing Environment External Environment Outside factors that influence marketing programs by posing opportunities or threats Five environmental factors: Political-Legal Environment Social-Cultural Environment Technological Environment Economic Environment Competitive Environment

External Environment

Outside factors that influence marketing programs by posing opportunities or threats

Five environmental factors:

Political-Legal Environment

Social-Cultural Environment

Technological Environment

Economic Environment

Competitive Environment

The External Marketing Environment 10 - The Firm and Its Marketing Plan Plans Strategies Decisions Competitive Environment Political & Legal Environment Social & Cultural Environment Economic Environment Technological Environment

Plans

Strategies

Decisions

Competitive Environment Substitute Product Product that is dissimilar to those of competitors but that can fulfill the same need Brand Competition Competitive marketing that appeals to consumer perceptions of similar products International Competition Competitive marketing of domestic products against foreign products

Substitute Product

Product that is dissimilar to those of competitors but that can fulfill the same need

Brand Competition

Competitive marketing that appeals to consumer perceptions of similar products

International Competition

Competitive marketing of domestic products against foreign products

Planning & Executing Marketing Strategy Marketing Managers Typically responsible for planning and implementing all the marketing activities that result in the transfer of goods or services to its customers Marketing Plan Detailed and focused strategy for gearing the marketing efforts to meet consumer needs and wants Developing the Marketing Plan Setting Goals for Performance

Marketing Managers

Typically responsible for planning and implementing all the marketing activities that result in the transfer of goods or services to its customers

Marketing Plan

Detailed and focused strategy for gearing the marketing efforts to meet consumer needs and wants

Developing the Marketing Plan

Setting Goals for Performance

The Marketing Mix Product Good, service, or idea that is marketed to fill consumer needs and wants Product Differentiation Creation of a product or product image that differs enough from existing products to attract consumers The combination of product, pricing, promotion, and distribution strategies used to market products

Product

Good, service, or idea that is marketed to fill consumer needs and wants

Product Differentiation

Creation of a product or product image that differs enough from existing products to attract consumers

The Marketing Mix Pricing Selecting the most appropriate price at which to sell a product Promotion Techniques for communicating information about products (advertising, personal selling, sales promotions, public relations) Place (Distribution) Getting products from producers to consumers The combination of product, pricing, promotion, and distribution strategies used to market products

Pricing

Selecting the most appropriate price at which to sell a product

Promotion

Techniques for communicating information about products (advertising, personal selling, sales promotions, public relations)

Place (Distribution)

Getting products from producers to consumers

Target Marketing & Market Segmentation Target Market Group of people that has similar wants and needs and that can be expected to show interest in the same products Market Segmentation Process of dividing a market into categories of customer types

Target Market

Group of people that has similar wants and needs and that can be expected to show interest in the same products

Market Segmentation

Process of dividing a market into categories of customer types

Identifying Market Segments Geographic Variables Geographical units that may be considered in developing a segmentation strategy Demographic Variables Characteristics of populations that may be considered in developing a segmentation strategy Psychographic Variables Consumer characteristics, such as lifestyles, opinions, interests, and attitudes Product Use Variables Consumer characteristics based on the ways in which a product is used, the brand loyalty it enjoys, and the reasons for which it is purchased

Geographic Variables

Geographical units that may be considered in developing a segmentation strategy

Demographic Variables

Characteristics of populations that may be considered in developing a segmentation strategy

Psychographic Variables

Consumer characteristics, such as lifestyles, opinions, interests, and attitudes

Product Use Variables

Consumer characteristics based on the ways in which a product is used, the brand loyalty it enjoys, and the reasons for which it is purchased

Marketing Research The study of consumer needs and wants and the ways in which sellers can best meet them

The study of consumer needs and wants and the ways in which sellers can best meet them

Market Research and the Marketing Process 10 - Controllable Marketing Variables Product Pricing Promotion Place Environmental Factors Economic Technological Competitive Political & Legal Social & Cultural Marketing Managers Stakeholders MARKETING RESEARCH Consumers Employees Investors Suppliers Local Communities Market Segmentation Target Market Segmentation Marketing Plan Goals for Performance Assessing Information Needs Providing Information Making Decisions

Product

Pricing

Promotion

Place

Economic

Technological

Competitive

Political & Legal

Social & Cultural

Consumers

Employees

Investors

Suppliers

Local Communities

Market Segmentation

Target Market Segmentation

Marketing Plan

Goals for Performance

The Research Process Study the Current Situation Select a Research Method Collect Data Analyze the Data Prepare a Report Secondary Data Data readily available as a result of previous research Primary Data Data developed through new research

Study the Current Situation

Select a Research Method

Collect Data

Analyze the Data

Prepare a Report

Research Methods Observation Market research technique that involves simply watching and recording consumer behavior Survey Market research technique using a questionnaire that is either mailed to individuals or used as the basis of interviews Focus Group Market research technique in which a group of people is gathered, presented with an issue, and asked to discuss it in depth Experimentation Market research technique that attempts to compare the responses of the same or similar people under different circumstances

Observation

Market research technique that involves simply watching and recording consumer behavior

Survey

Market research technique using a questionnaire that is either mailed to individuals or used as the basis of interviews

Focus Group

Market research technique in which a group of people is gathered, presented with an issue, and asked to discuss it in depth

Experimentation

Market research technique that attempts to compare the responses of the same or similar people under different circumstances

Understanding Consumer Behavior Consumer Behavior Various facets of the decision process by which customers come to purchase and consume products

Consumer Behavior

Various facets of the decision process by which customers come to purchase and consume products

Influences on Consumer Behavior Psychological Personal Social Cultural Brand Loyalty Pattern of regular consumer purchasing based on satisfaction with a product

Psychological

Personal

Social

Cultural

Brand Loyalty

Pattern of regular consumer purchasing based on satisfaction with a product

The Consumer Buying Process Personal & Environmental Factors Psychological Personal Social Cultural Stages of the Consumer Buying Process Evaluation of Alternatives Which are comfortable? Which are affordable? How will others react to them? Information Seeking Search for stores, styles, prices, opinions of others Problem Recognition Need to replace old shoes Purchase Decision Choose rationally or emotionally Postpurchase Decision Observe reactions of others; test durability, compare with older shoes Marketing Factors Product Pricing Promotion Place 10 -

The Consumer Buying Process Problem/Need Recognition Information Seeking Evaluation of Alternatives Emotional Rational Purchase Decision Postpurchase Evaluations

Problem/Need Recognition

Information Seeking

Evaluation of Alternatives

Emotional

Rational

Purchase Decision

Postpurchase Evaluations

Organizational Marketing & Buying Behavior Organizational (or Commercial) Markets have buying behaviors that are different from those found in consumer markets and are much less observable by the public.

Organizational (or Commercial) Markets have buying behaviors that are different from those found in consumer markets and are much less observable by the public.

Organizational Markets Industrial Market Firms that buy goods that are either converted into products or used during production Reseller Market Intermediaries who buy and resell finished goods Government Market Federal, state, local governments (municipalities, counties, townships, and school districts) Institutional Market Nongovernmental buyers of goods and services (hospitals, churches, museums, and charitable organizations)

Industrial Market

Firms that buy goods that are either converted into products or used during production

Reseller Market

Intermediaries who buy and resell finished goods

Government Market

Federal, state, local governments (municipalities, counties, townships, and school districts)

Institutional Market

Nongovernmental buyers of goods and services (hospitals, churches, museums, and charitable organizations)

Organizational Buying Behavior Demand The willingness and ability of buyers to purchase a good or service. The two major Differences in Demand Differences in demand between consumer and industrial products are derived demand and inelasticity of demand Derived Demand Demand for industrial products that results from demand for consumer products Inelastic Demand Demand for industrial products that is not largely affected by price changes

Demand

The willingness and ability of buyers to purchase a good or service. The two major

Differences in Demand

Differences in demand between consumer and industrial products are derived demand and inelasticity of demand

Derived Demand

Demand for industrial products that results from demand for consumer products

Inelastic Demand

Demand for industrial products that is not largely affected by price changes

Differences in Buyers Unlike most consumers, organizational buyers are professional, specialized, and expert (or at least well informed): Professionals Organizational buyers trained in arranging buyer-seller relationships, negotiating purchase terms, arranging for formal contracts Specialists Industrial buyers are company specialists in a line of items Experts Industrial buyers who are experts about the products they are buying

Unlike most consumers, organizational buyers are professional, specialized, and expert (or at least well informed):

Professionals

Organizational buyers trained in arranging buyer-seller relationships, negotiating purchase terms, arranging for formal contracts

Specialists

Industrial buyers are company specialists in a line of items

Experts

Industrial buyers who are experts about the products they are buying

The Industrial Buying Process Stages in the Buying Process Postpurchase Evaluation of product and evaluation of supplier Purchase Decision Information Seeking 10 - Problem Recognition Developing Product Recognition Evaluation of Alternatives using product specification

Differences in Decision Making Developing Product Specifications Evaluating Alternatives Making Postpurchase Evaluations Differences in the Buyer-Seller Relationship

Developing Product Specifications

Evaluating Alternatives

Making Postpurchase Evaluations

Differences in the Buyer-Seller Relationship

The International Marketing Mix International Products International Pricing International Promotion International Distribution

International Products

International Pricing

International Promotion

International Distribution

Small Business and the Marketing Mix Small-Business Products Small-Business Pricing Small-Business Promotion Small-Business Distribution

Small-Business Products

Small-Business Pricing

Small-Business Promotion

Small-Business Distribution