Marketing Management

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Marketing Management

  1. 1. MARKETING MANAGEMENT 2011 Fall - Part I - Assoc. Prof. Dr. Şebnem Burnaz
  2. 2. UnderstandingMarketing Concept andMarketing Management ‖The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.‖ Peter Drucker
  3. 3. Overview What is marketing? Why is marketing important? What is the scope of marketing? What are some fundamental marketing concepts? What are the tasks necessary for successful marketing management?
  4. 4. What is Marketing? Selling? Advertising? Making products available in stores? All of the above, plus much more!
  5. 5. Marketing…is about… ―Identifying and meeting human and social needs‖ ―Meeting needs profitably‖ ―Generating customer value at a profit‖  ―Managing profitable customer relationships by delivering superior value to customers‖
  6. 6. What is Marketing? No single correct definition or approach Common subject matters:  The ability to satisfy customers,  The identification of favorable marketing opportunities,  The need to create an edge over competitors,  The capacity to make profits to enable a viable future for the organization,  The use of resources to maximize a business‘ market position,  The aim to increase market share mainly in target markets…
  7. 7. What is Marketing? Marketing as a Process Capture value from Create value for customers customers and build customer in return relationships Capture Understand Design a Construct a Build value from the customer- marketing profitable customersmarketplace driven program relationships to createand customer marketing that delivers and create profits andneeds&wants strategy superior customer customer value delight quality
  8. 8. What Is Marketing?Marketing is an organizational function and 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
  9. 9. The ________ is the United States‘ 24th largest advertiser with an annual budget of more than $1 billion. 1. Procter & Gamble Company 2. Boeing Company 3. U.S. Government 4. Levi Strauss & Co.
  10. 10. Core Concepts of Marketing Needs, wants, and demands Markets Products and services Exchange, Value andand relationships satisfaction
  11. 11. Core Concepts of Marketing  Need Needs, wants, and  State of felt deprivation demands  Basic human requirements Marketing offers:  e.g. needs food including products,  Wants services and experiences  Needs directed to specific objects Value and satisfaction  The form of needs as Exchange and shaped by culture and the relationships individual  e.g. wants a BigMac Markets  Demands  Wants which are backed by buying power
  12. 12. Core Concepts of Marketing Needs, wants, and  Marketing offering demands  Combination of Marketing offers: products, services, information or products, services, experiences offered to a experiences… market that satisfy a Value and satisfaction need or want. Offer may include Exchange and  services, activities, relationships people, places, Markets information or ideas.
  13. 13.  Marketing myopia is focusing only on existing offers and losing sight of underlying consumer needs. Market offerings are not limited to physical products:  UNCF markets the idea that ―A mind is terrible thing to waste‖.
  14. 14. Core Concepts of Marketing What is Marketed? ProductsAnything that can be Offered to a Market to Satisfy a Need or Want Events Places Persons Experiences Properties Information Organizations Ideas Services Activities or Benefits Offered for Sale That Are Essentially Intangible and Don‘t Result in the Ownership of Anything
  15. 15. Core Concepts of Marketing  Value Needs, wants, and  Customers form expectations demands regarding value Marketing offers: including products,  Value: services and experiences  the customer‘s estimate of the product‘s overall capacity to Value and satisfaction satisfy his or her needs. Exchange and  the satisfaction of customer relationships requirements at the lowest possible cost Markets Satisfaction
  16. 16. Value - Satisfaction Customer benefits  Customer satisfaction Anything desired by the The feeling that a product customer that is received in has met or exceeded the an exchange customer‘s expectations Customer costs Anything a customer gives up in an exchange for benefits What is the benefit of  Monetary price of the benefit a satisfied customer to  Search costs (time and the company? effort) to locate the product  Risks associated with the exchange
  17. 17. Core Concepts of Marketing Exchange Needs, wants, and   The act of obtaining a desired demands object from someone by Marketing offers: offering something in return including products,  The response may be more services and experiences than simply buying or trading products and services Value and satisfaction  One exchange is not the goal, Exchange and relationships with several relationships exchanges are the goal Markets  Relationships are built through delivering value and satisfaction  Marketing network  consists of the company and all its supporting stakeholders
  18. 18. Relationship Marketing Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their businesses.
  19. 19. Managing Relationships: Customers Customer Relationship Management (CRM)  Using information about customers to create marketing strategies that develop and sustain desirable customer relationships  Identifying buying-behavior patterns of customers  Using behavioral information to focus on the most profitable customers
  20. 20. Managing Customer Relationships Relationship Building Blocks • AIM  to increase Customer Customer CLV (consumerperceived value satisfaction lifetime value)!• The difference • The extent to • to gain a greater between total which a product‘s proportion of an customer value perceived existing and total performance customer‘s customer cost matches a purchases over a buyer‘s long period expectations
  21. 21. Core Concepts of Marketing Needs, wants, and  Market demands  Set of actual and Marketing offers: potential buyers of a including products, product services and experiences  These buyers share a particular need or want Value and satisfaction that can be satisfied Exchange and through exchange relshps relationships Marketing means Markets  managing markets to bring about profitable customer relshps
  22. 22. A Simple Marketing System
  23. 23. Marketing defined as...Process by which individuals and groupsobtain what they need and want through creating and exchanging products and value with others.Simply put: Marketing  the delivery of customer satisfaction at a profit.
  24. 24. ―Good marketing is no accident, but a result of carefulplanning and execution…But marketing excellence israre and difficult to achieve. Marketing is both an ‗art‘and a ‗science‘ –there is constant tension between theformulated side of marketing and the creative side ‖
  25. 25. More Definitions of Marketing (cont.) From the societal perspective; some marketers describe marketing as the creation and delivery of a standart of living. From the managerial perspective; marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of goods and services to create exchanges that satisfy individual and organizational goals.
  26. 26. What Is Marketing Management? Marketing management is the art and science of choosing target markets and building profitable relationships by getting, keeping, and growing customers through creating, delivering, and communicating superior customer value  This definition must include answers to 2 questions:  What customers will we serve?  How can we best serve these customers?
  27. 27. Marketing Management Marketing management involves  managing demand  involves managing customer relationships  Marketers aim to influence the level, timing and composition of demand to meet organizational goals. Marketing management is concerned  not only with finding and increasing demand,  but also with changing or even reducing it in some cases
  28. 28. Marketing ManagementMarketing management: Customer management & Demand management  Choosing a Value PropositionThe value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs
  29. 29. Company Orientations towards the Marketplace Consumers prefer products that areProduction Concept widely available and inexpensive Consumers favor products that Product Concept offer the most quality, performance, or innovative features Consumers will buy products only if Selling Concept the company aggressively promotes/sells these products Focuses on needs/ wants of targetMarketing Concept markets & delivering value better than competitors Focuses on delivering the desiredSocietal Marketing satisfaction more effectively and efficiently than competitors in a way that preserves or Concept enhances the well-being of both consumer and society
  30. 30. Marketing Concept Achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do 4 pillars of modern marketing : 1. Target market 2. Customer needs 3. Integrated marketing 4. Profitability through customer satisfaction
  31. 31. Marketing and Sales Concepts ContrastedStarting point Focus Means Ends Existing Selling and Profits throughFactory products promotion sales volume (a) The selling concept Customer Integrated Profits throughMarket needs marketing customer satisfaction (b) The marketing concept
  32. 32. Marketing Concept1) Target market  homogenous group of customers to whom the company wishes to appeal2) Customer needs  Consumers may not be fully conscious of their needs / it may not be easy to articulate these needs OR they may use words that require some interpretation  Customer-oriented thinking  to define customer needs from the customer‘s point of view  Sales revenue  New customers + Repeat customers  ―Customer Retention‖ vs. ―Customer Attraction‖  Customer value and customer satisfaction  building blocks of customer relationship management
  33. 33. Marketing Concept3) Integrated Marketing  Various marketing functions must work together for customer satisfaction (coordination of marketing mix elements: 4Ps)  Marketing Mix  controllable variables the company puts together to satisfy its target market(s). Goods, services, or ideas that satisfy customer Product needs Decisions and actions that establish pricing Pricing objectives and policies and set product prices Place The ready, convenient, and timely availability (Distribution) of products Activities that inform customers about thePromotion organization and its products
  34. 34. Marketing Concept - The 4 Ps
  35. 35. Marketing Concept - The 4 Ps  The 4 Cs Marketing MixProduct Place ConvenienceCustomer Solution Price Promotion Customer Cost Communication
  36. 36. Marketing ConceptIntegrated Marketing  Marketing must bewell coordinated with other departments inthe company; all departments have to work together to satisfy customers‘ needs and wants “Marketing is too important to be left to the marketing department.” David Packard, Hewlett-Packard
  37. 37. Marketing Concept4) Profitability through customer satisfaction  To achieve profits as a result of creating superior customer value
  38. 38. Selling – Marketing... ―There will always be need for some selling. But the aim of marketing is to make selling unnecessary. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy.‖ Peter Drucker
  39. 39. Societal Marketing Concept Company‘s negative effects on society Conflict between consumer wants and long-term social welfare The company should make good marketing decisions by considering consumers‘ wants, the company‘s requirements, consumers‘ long-term interests, and society‘s long-run interests
  40. 40. Societal Marketing Concept Society (Human Welfare) Societal Marketing Concept Consumers Company(Want Satisfaction) (Profits)
  41. 41. Evolution of Marketing Thought How marketing has become “marketing” as we understand it and apply its practices today?
  42. 42. Evolution of Marketing Thought Production Era (1850s-1920s)  Industrial revolution; mass production  Few products and little competition Sales Era (1920s-1950s)  The focus was on personal selling and advertising  Sales seen as the major means for increasing profits Mktg Era (1950s-present)  Customer orientation replaced the ―hard sell‖ of the sales-led era  Determination of the needs and wants of customers before introducing products or services Relationship Marketing Era: 1990s-  Marketing era has recently shifted from being ―transaction-based‖  to focusing on ―relationships‖  Both attracting and ―retaining‖ customers
  43. 43. Evolution of Marketing Thought: New Era(s) in Marketing (The Millenium)..from Relationship Marketing to...  Network marketing  E-marketing  Community marketing  Buzz marketing  Digital marketing  Mobile marketing  ... ... ...
  44. 44. Holistic Marketing Concept New marketing… A need to think about how to operate and compete in a new marketing environment Holistic marketing  based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies Premise: ―everything matters‖ with marketing!
  45. 45. Holistic Marketing
  46. 46. The New Four Ps People Processes Programs Performance
  47. 47. Marketing Management Tasks Develop market strategies and plans Capture marketing insights Connect with customers Build strong brands Shape market offerings Deliver value Communicate value Create long-term growth
  48. 48. Shifts in Marketing Management from marketing does the marketing  to… everyone does the marketing from organizing by product units  to… organizing by customer segments from making everything  to… buying more goods and services from outside from using many suppliers  to… working with fewer suppliers in a ‗partnership‘ from relying on old market positions  to… uncovering new ones from emphasizing tangible assets  to… emphasizing intangible assets
  49. 49. Shifts in Marketing Management from building brands through advertising  to… building brands through integrated communications from organizing by product units  to… organizing by customer segments from attracting customers through stores and salespeople  to...making products available online from trying to sell everyone  to... be the best firm serving well-defined target markets from focusing on profitable transactions  to… focusing on customer lifetime value from focusing on shareholders  to… focusing on stakeholders
  50. 50. Marketing Management Tasks Developing  Shaping the market marketing strategies offerings and plans  Delivering value Capturing marketing insights  Communicating value Connecting with customers  Creating long-term growth Building strong brands
  51. 51. Strategic MarketingPlanning ―The company without a strategy is willing to try anything.‖ Michael Porter
  52. 52. Major Questions How does marketing affect customer value? How is strategic planning carried out at different levels of the organization? What is the role of marketing in the overall strategic direction of the company? What does a marketing plan include?
  53. 53. Phases of Value Creation and Delivery Choosing the value Providing the value Communicating the value
  54. 54. What is the Value Chain?The value chain is a tool to createmore customer value because everyfirm is a synthesis of primary andsupport activities performed to design,produce, market, deliver, and supportits product.
  55. 55. Core Business Processes Market-sensing process New-offering realization process Customer acquisition process Customer relationship management process Fulfillment management process
  56. 56. Characteristics of Core Competencies A source of competitive advantage Applications in a wide variety of markets Difficult to imitate
  57. 57. Maximizing Core Competencies (Re)define the business concept (Re)shaping the business scope (Re)positioning the company‘s brand identity
  58. 58. What is Holistic Marketing? Holistic marketing sees itself asintegrating the value exploration, value creation, and value delivery activitieswith the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders.
  59. 59. Questions to Address in HolisticMarketing What value opportunities are available? How can we create new value offerings efficiently? How can we delivery the new offerings efficiently?
  60. 60. Strategic Planning Strategic Planning  Managerial process of developing and maintaining a match between the organization‘s resources and the market opportunities.  The aim  to shape and reshape company‘s businesses and products in order to reach to targeted profits and growth.
  61. 61. The Strategic Planning, Implementation,and Control Processes
  62. 62. Steps in Strategic Planning Business unit, Corporate Level product, and market level1) Defining the corporate mission2) Setting objectives and goals Planning,3) Designing business portfolio marketing, Determining SBUs and other Assigning resources to SBUs functional4) Assessing growth opportunities strategies
  63. 63. Defining the Corporate Mission A mission statement  a statement of the organization‘s purpose --  ―Mission statement  what it wants to accomplish to be guided by a in the larger environment ―vision‖—an almost ―impossible dream‖ A clear mission statement that provides a  acts as ―invisible hand‖ direction for the that guides employees to company for the next work toward realizing the 10 to 20 years organization‘s goals
  64. 64. Defining the Corporate Mission What is our business? Who is the customer? What is the value to the customer? What will our business be? What should our business be?
  65. 65. Good Mission Statements Focus on a limited number of goals Stress major policies and values Define major competitive spheres Take a long-term view Short, memorable, meaningful
  66. 66. What is our business: Product Orientation vs. Market Orientation Company Product MarketDisney We run theme parks We create fantasies—a place where dreams come trueXerox We make copying We improve office productivity equipmentColumbia Pictures We make movies We entertain peopleAmazon.com We sell books, videos, We make the Internet buying CDs, toys, consumer experience fast, easy, and electronics and other enjoyable— we‘re the place where products online you can find and discover anything you want to buy onlineNike We sell athletic shoes and We bring inspiration and innovation apparel to every athlete* in the world (*if you have a body, you are an athlete)
  67. 67. Company Goals and ObjectivesMission  hierarchy of objectives Mission Statement Marketing Marketing Marketing Objective # 1 Objective # 2 Objective # 3Marketing Marketing Strategy Strategy
  68. 68. Google
  69. 69. ―We will provide branded products and services of superior quality and value that improve the lives of the worlds consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.‖
  70. 70. Business Portfolio AnalysisIdentify key businesses (SBUs)that make up the company Assess the attractiveness of its various SBUs Decide how much support each SBU deserves
  71. 71. The Boston Consulting Group‘s Growth-Share Matrix 20%- Stars Question marksMarket Growth Rate ?2 18%- 4 16%- 14%- 3 ? 1 12%- 5 10%- 8%- Cash cow Dogs 6%- 8 4%- 2%- 6 7 0 10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x Relative Market Share
  72. 72. Boston Consulting Group Approach Relative Market Share High Low Stars Question Marks ? HighMarket Growth Rate • High growth & share • High growth, low share • Profit potential • Build into Stars or phase out • May need heavy • Require cash to hold investment to grow market share Cash Cows Dogs • Low growth, high share • Low growth & share Low • Established, successful • Low profit potential SBU‘s •Produce cash
  73. 73. Boston Consulting Group Approach and Strategies After the classification of SBUs  determine what role each will play in the future  Build  to invest more in the SBU in order to build its share  Hold  to invest enough just to hold at the current level  Harvest to increase the SBU‘s short-term cash flow  Divest  to sell or to liquidate the business
  74. 74. The SBU Life CycleSBUs have a life cycle in general:a) Question marksb) Starsc) Cash cowsd) DogsExamine not only the business‘ current positions, but also its moving positions.
  75. 75. Problems With Matrix ApproachesCan be Difficult, Time-Consuming, & Costly to ImplementDifficult to Define SBU‘s & Measure Market Share/ Growth Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification
  76. 76. The Strategic-Planning Gap Desired sales Diversification growth Strategic- planning Integrative growth gapSales Intensive growth Current Portfolio sales 0 5 10 Time (years)
  77. 77. Planning New Business, DownsizingOlder BusinessesGROWTH STRATEGIES – 3 alternatives :1. Intensive Growth2. Integrative Growth3. Diversification Growth
  78. 78. Growth Strategies: Ansoff‘s Product/Market Expansion Grid Existing New products productsExisting 1. Market 3. Productmarkets penetration development New 2. Marketmarkets development 4. Diversification
  79. 79. Downsizing Some reasons that a company might want to abandon products or markets:  The market environment might change (making some of the company‘s product or markets less profitable – e.g. economic recession)  The company may have grown too fast or entered areas where it lacks experience  Some of the company‘s products or business units age and die.
  80. 80. Marketing‘s Key Role inStrategic Planning Provide a guiding philosophy Identify attractive opportunities Design effective strategies Build strong value chains Form superior value delivery networks
  81. 81. The Business Unit Strategic Planning
  82. 82. The Business Unit Strategic Planning Business Mission  each SBU needs to define its specific mission within the broader company mission External Environment Analysis  to build a MIS to monitor:  Key external macroenvironment forces  Significant microenvironment actors  Trends and important developments  to identify the associated opportunities and threats
  83. 83. The Business Unit Strategic Planning Internal Environment Analysis  Each business needs to evaluate its internal strengths and weaknesses periodically  ―Checklistfor Performing Strengths/Weaknesses Analysis‖  Management or an outside consultant  reviews the business‘s marketing, financial, manufacturing and organizational competencies and rates each factor as strength or weakness  SWOT ANALYSIS
  84. 84. The Business Unit Strategic Planning / Example of a Checklistı PERFORMANCE IMPORTANCE Main 2nd Moderate 2nd Main High Medium Low Strength Strength Weakness WeaknessMARKETING Firms reputation Market share Product/service quality Pricing Distribution Promotion Sales force R&D / Innovation Geographical locationFINANCE High profitability Low cost of capital Cash flow Financial stabilityPRODUCTION Scale economies Capacity of meeting demand Talented productive power Timely production Technical competenceORGANIZATION Skillful managers Loyal employees Entrepreneurship orientation Flexibility degree Rapid adaptation
  85. 85. SWOT AnalysisMarketing Analysis – SWOT Analysis
  86. 86. Market Opportunity Analysis (MOA) Can the benefits involved in the opportunity be articulated convincingly to a defined target market? Can the target market be located and reached with cost-effective media and trade channels? Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
  87. 87. Market Opportunity Analysis (MOA) Can the company deliver the benefits better than any actual or potential competitors? Will the financial rate of return meet or exceed the company‘s required threshold for investment?
  88. 88. Opportunity Matrix Success Probability Opportunities High Low 1. Company develops a more powerful lighting systemAttractiveness 2. Company develops a device High 1 2 for measuring the energy efficiency of any lighting system 3. Company develops a device for measuring illumination level Low 3 4. Company develops a 4 software program to teach lighting fundamentals to TV studio personnel
  89. 89. Threat Matrix Probability of Occurrence Threats High Low 1. Competitor develops a superior lightingSeriousness High system 1 2 2. Economic depression 3. Higher costs 4. Legislation to reduce number of TV studio Low 3 4 licenses
  90. 90. The Business Unit Strategic Planning Goal Formulation (Goals  objectives that are specific with respect to magnitude and time)  Turning objectives  into measurable goals  facilitates management planning, implementation and control
  91. 91. The Business Unit Strategic Planning: Strategy Formulation Overall Cost Leadership DifferentiationMichael Porter Focus
  92. 92. The Marketing Process Analyzing marketing opportunities Researching and selecting target markets Designing marketing strategies Planning marketing programs Organizing, implementing, controlling the marketing effort
  93. 93. The Marketing Process Managing the Marketing Effort
  94. 94. Managing the Marketing EffortMarketing Functions  Finding opportunities : the company must analyze• Analysis  its market & mktg• Planning  environment company strengths &• Implementation weaknesses  current and possible mktg• Control actions  Avoiding threats  Understanding strengths  Analyzing weaknesses
  95. 95. Managing the Marketing EffortMarketing Functions• Analysis  Marketing planning  involves deciding on• Planning marketing strategies• Implementation that will help the company reach its• Control strategic objectives
  96. 96. What is a Marketing Plan? A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level.
  97. 97. Levels of a Marketing Plan Strategic  Tactical  Target marketing  Product features decisions  Promotion  Value proposition  Merchandising  Analysis of marketing  Pricing opportunities  Sales channels  Service
  98. 98. Marketing planThe application of marketing resources to achieve marketing objectives Executive Marketing Threats and summary situation opportunities Objective Marketing Action and issues strategy programs Budgets Controls
  99. 99. Managing the Marketing EffortMarketing Functions  The process that turns mktg plans into mktg• Analysis actions to accomplish strategic mktg objectives• Planning  Successful implementation• Implementation depends on how well the company blends its people,• Control organizational structure, decision and reward system, and company culture into a cohesive action plan that supports its strategies
  100. 100. Managing the Marketing EffortMarketing Department Organization Functional organization Geographic organization Product management organization Market or customer management
  101. 101. Managing the Marketing EffortMarketing Functions  Measurement and evaluation of the• Analysis results of marketing• Planning strategies• Implementation  Checking for differences between• Control goals and performance  Taking of corrective action as needed
  102. 102. Measuring Marketing Plan Performance Sales analysis Market share analysis Marketing expense-to-sales ratio Financial analysis
  103. 103. Managing the Marketing Effort Return on marketing investment (Marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment.  provides a measurement of the profits generated by investments in marketing activities.
  104. 104. Managing the Marketing Effort Marketing Analysis of Company‘s Situation Marketing Marketing Control Planning Implementation Measure ResultsDevelop Strategic Carry Out Plans The Evaluate Plans Results Develop Marketing Take Plans Corrective Action
  105. 105. Marketing Environment
  106. 106. The Marketing Environment Marketing Environment  the actors and forces outside marketing that affect marketing management‘s ability to develop and maintain successful relationships with its target customers.  Microenvironment actors - forces close to the company that affect its ability to serve its customers.  Macroenvironment forces - larger societal forces that affect all the microenvironment.
  107. 107. The Marketing EnvironmentDemographic- Marketing Technological- Economic Intermediaries NaturalEnvironment Environment Product ProfitableSuppliers Place Customer Price Publics Relshps. Promotion Political- Social- Legal Competitors CulturalEnvironment Environment
  108. 108. The Microenvironment Customer Markets Company Internal Environment
  109. 109. The Microenvironment: Company‘s Internal Environment Functional areas inside a company that have an impact on the marketing department‘s plans Top management  responsible for setting company‘s mission, objectives, broad strategies and policies Marketing managers;  make decisions within the parameters established by top management  must also work closely with other company departments
  110. 110. The Microenvironment: Suppliers Firms and individuals providing resources to the company and its competitors to produce goods and services. Important link in the company‘s overall customer ―value delivery system‖  to watch supply availability  to monitor price trends of key inputs
  111. 111. The Microenvironment: Intermediaries Firms that help the company to promote, sell, and distribute its goods to final buyers  Resellers  Physical distribution firms  Marketing service agencies  Financial intermediaries
  112. 112. The Microenvironment: Customer Markets Consumer markets  Individuals & households that buy goods & services for personal consumption Business markets  Buy goods & services for further processing in their production process Resellers markets  Buy goods & services in order to resell them at a profit Government markets  Buy goods & services in order to produce public services or transfer them to those that need them International markets  Buyers of all types in foreign countries
  113. 113. The Microenvironment: Competitors Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors to be successful in the marketplace. No single competitive strategy is best for all companies
  114. 114. The Microenvironment: Publics Any group that has actual or potential interest in or impact on an organization‘s ability to achieve its objectives.  Financial publics (banks, stockholders)  Media publics (newsp.,magazines, radio&TV)  Government publics  Citizen-action publics (consumer org., environmental groups  Local publics  General publics  Internal publics
  115. 115. The Macroenvironment  Demographic  Economic  Natural  Technological  Political-Legal  Social-Cultural
  116. 116. Demographic EnvironmentWorldwide Population Growth Age Structure of the Population Household Patterns Geographical Shifts in Population Educational Groups Shift from Mass Market to Micromarkets Ethnic Markets
  117. 117. Economic Environment Economic Development KeyChanges in Income Economic Concerns for MarketersChanging Consumer Spending Patterns
  118. 118. Economic Environment Income DistributionSubsistence economies  The vast majority of people engage in simpleagriculture, consume most of their output and barter the rest for simple goodsand services. Raw-material-exporting economies  are rich in one or more natural resources but poor in other respects. Much of their revenue comes from exporting these resources. Industrializing economies  Manufacturing accounts for 10 to 20% of gross domestic product. Industrialization creates a new rich class and a small but growing middle class, both demanding new types of goods. Industrial economies  are major exporters of manufactured goods and investment funds. They buy manufactured goods from one another & export them to other types of economies in exchange for raw materials & semi-finished goods. Savings, Debt, & Credit Availability
  119. 119. Natural Environment Shortages of Raw Materials FactorsIncreased Energy Affecting Increased Costs the Pollution Natural Environment Changing Role of Governments
  120. 120. Technological EnvironmentAccelerating Pace Unlimited Opportunities of Change for Innovation Issues in the Technological Environment Varying Increased R & D Budgets Regulation
  121. 121. Legal EnvironmentIncludes laws, government agencies, etc. that influence & limit organizations/individuals in a given society Growth of Legislation Special- Regulating Interest Business Groups
  122. 122. Social/Cultural Environment People‘s View of ThemselvesPeople‘s View of People‘s View of the Universe Cultural Values Others of aPeople‘s View of Society People‘s View of Nature Organizations People‘s View of Society
  123. 123. Understanding Markets through Marketing Information Systems Marketing is becoming a battle based more on information than on sales power
  124. 124. Major Questions What are the components of a modern marketing information system? What are useful internal records? What makes up a marketing intelligence system? How can companies accurately measure and forecast demand?
  125. 125. Importance of Market Information Companies need information about their marketing environment, competition, customer needs Reasons for the need for real-time market information  Global marketing  Buyer needs & wants  Price competition vs. nonprice competition Companies with superior information;  choose its markets better  develop better offerings  execute better marketing planning
  126. 126. The Marketing Information System A marketing information system (MkIS)  consists of people, equipment, and procedures  to gather, sort, analyze, evaluate, and distribute  needed, timely, and accurate info. to marketing decision makers. The MkIS helps managers to: 1. Assess information needs, 2. Develop needed information, 3. Distribute information.
  127. 127. The Marketing Information System
  128. 128. Useful questions to determine information needs of marketing managers What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What studies do you periodically request? What information would you want that you are not getting now? What are the four most helpful improvements that could be made in the present marketing information system?
  129. 129. Functions of a MkIS: Developing InformationInformation Needed by Managers Can be Obtained From: Computerized Collection of Information Internal Data from Data Sources (i.e. accounting) within the Company. Marketing Collection and Analysis of Publicly Available Information about Competitors Intelligence and the Marketing Environment Design, Collection, Analysis, and Marketing Reporting of Data about a Specific Research Marketing Situation Facing the Organization.
  130. 130. Internal Record System Consists of computerized collections of info. obtained from data sources within the company (internal data); Includes reports on orders, sales, prices, costs, inventory levels, receivables, payables, etc.  ―opportunities‖ and ―problems‖ can be determined by analyzing these information Can usually be accessed more quickly and cheaply May be incomplete or data may be in the wrong form.
  131. 131. Internal Record System The order-to-payment cycle  Sales representatives, dealers, and customers send orders to the firm  The sales department prepares invoices, transmits copies to various departments, and back-orders out-of-stock items  Shipped items generate shipping and billing documents that go to various departments. Sales Information Systems  Marketing managers need timely and accurate reports on current sales.
  132. 132. Marketing Intelligence System A set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment Competitive info. gathering sources:  Company sales representatives  Suppliers, resellers, customers (―mystery shoppers‖)  Annual reports, speeches, press releases, and advertisements  Business publications, web pages  Trade show exhibits  Outside companies (e.g. mktg research company)
  133. 133. Sources of Competitive Information Independent customer goods and service review forums Distributor or sales agent feedback sites Combination sites offering customer reviews and expert opinions Customer complaint sites Public blogs
  134. 134. Steps to Quality Marketing Intelligence Train sales force to scan for new developments Motivate channel members to share intelligence Hire external experts to collect intelligence Network externally Utilize a customer advisory panel Utilize government data sources Purchase information
  135. 135. Additional Information Forecasting and Demand Measurement Which market to measure?  Potential market  Available market  Target market  Penetrated market
  136. 136. A Vocabulary for Demand Measurement Market Demand Market Forecast Market Potential Company Demand Company Sales Forecast Company Sales Potential
  137. 137. Demand Measurement Market demand—the total volume for a product that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Market potential—the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment.
  138. 138. Market Demand Functions
  139. 139. Company Demand and Sales Forecast Company demand—the company‘s estimated share of market demand at alternative levels of company marketing effort in a given time period. Company sales forecast—the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.
  140. 140. Estimating Current Demand Total market potential—the maximum number of sales that might be available to all of the industry‘s firms during a given period, under a given level of industry marketing effort and environmental conditions. Area market potential—the market potential of a specific location:  Market buildup method  Multiple-factor method
  141. 141. Estimating Current Demand: Total Market Potential Calculations  Multiple potential number of buyers by average quantity each purchases times price  Chain-ratio method
  142. 142. Estimating Current Demand:Area Market Potential Market-Buildup
  143. 143. Estimating Current Demand:Area Market Potential Multiple-Factor Index
  144. 144. Sales Forecasting Techniques Time Series Methods  Correlational  Naive Forecasting Methods  Trend Analysis  Simple regression  Linear trends  Multiple regression Non-linear trends Judgemental    Seasonal adjustments Methods  Moving Averages  Jury of Executive  Exponential Opinion Smoothing  Sales Force Composite
  145. 145. Marketing Research System Marketing research  the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing an organization. Market research  research into a particular market !  just one component of mktg research
  146. 146. Examples of research
  147. 147. Types of research• Quantitative Research: Seeks to quantify the dataand typically applies some form of statistical analysis.  It is based on large number of representative sample  Data collection is structured  Recommend a final course of action• Qualitative Research: The main objective is to gainqualitative understanding of the underlying reasons &motives.  It is based on large number of representative sample  Sample consists of small number of nonrepresentative cases.  Data collection is unstructured  Data analysis is nonstatistical  It is possible to develop an initial understanding
  148. 148. Types of Marketing Research Firms Syndicated Custom Specialty-line
  149. 149. The Marketing Research ProcessDefining the Implementing the researchproblem and Developing the plan: collecting research research plan the data objectives Implementing Interpreting the research and reporting plan: analyzing the findings the data
  150. 150. Step 1: Defining the Problem & Research Objectives Example: ABC Airlines Case ABC Airlines is constantly looking for new ways to serve the needs of air travelers:  One manager came up with the idea of offering phone service to passengers.  The other managers got excited about this idea and agreed that it should be researched further.  The marketing manager volunteered to do some preliminary research  The marketing manager then asked the company‘s research manager to find out how air travelers would respond to this new service.
  151. 151. Defining the Problem & Research Objectives Example: ABC Airlines Case (cont.) Research Problem ?  “to find out everything about air travelers’ need” – too broad!  “to find out if enough passengers aboard a B-747 flying between East Coast and West Coast would be willing to pay $ 25” to make a phone call so that the company would break even on the cost of offering this service” – too narrow! Research Problem is finally defined as: “Will offering an in- flight phone service create enough incremental preference and profit for ABC Airlines to justify its cost against other possible investments that the company might make?”
  152. 152. Defining the Problem & Research ObjectivesExample: ABC Airlines Case (cont.) Research Objectives:  What are the main reasons that airline passengers might place phone calls while flying?  What kinds of passengers would be the most likely to make phone calls?  How many passengers are likely to make phone calls, given different price levels?  How many extra customers might choose this company because of this new service?  How important will phone service be relative to other factors? (such as flight schedules, food quality, baggage handling, etc.)
  153. 153. Defining the Problem & Research Objectives •Sheds light on problem - suggestExploratory solutions or new ideas. •Gathers preliminary information Research that will help define the problem and suggest hypotheses •Ascertain magnitudesDescriptive •Describes things as market Research potential for a product or the demographics and consumers’ attitudes. •Test cause- and-effect Causal relationships. Research •Tests hypotheses about cause- and-effect relationships.
  154. 154. Step 2: Developing the Research Plan Data Research Sources Approach Research Sampling Instruments Plan Contact Methods
  155. 155. Developing the Research Plan: Data Sources both must be: Data that werecollected for another Relevant Data gathered forpurpose, and already a specific purposeexist somewhere Accurate or for a specific research project(+)Obtained more quikcly Current / at lower cost (-)Might not be Impartial usable data.
  156. 156. A classification of marketing research data
  157. 157. Developing the Research Plan Secondary Data Collection Internal Sources  Company profit-loss statements, balance sheets, sales figures, sales-call reports, invoices, inventory records, and prior research reports. Government Publications  Statistical Abstract  County and City Data Book  Industrial Outlook  Marketing Information Guide Periodicals and Books  Business Periodicals Index  Standard and Poor‘s Industry On-Line Databases (e.g. Lexis-Nexis, Compuserve, Dialog)
  158. 158. Applications of Secondary Data Demand Estimation Monitoring the environment Segmentation and Targeting
  159. 159. Sources of Secondary Data (examples) ESOMAR website - www.esomar.org  founded in 1948  4,400 members in 100 countries  mission : "ESOMAR is the world organisation for enabling better research into markets, consumers and societies."  the aim is to promote the value of market and opinion research in illuminating real issues and bringing about effective decision- making.  creates and manages a comprehensive programme of industry- specific and thematic conferences, publications and communications www.arastirmacilar.org in Turkey (TÜAD – Türkiye Araştırmacılar Derneği) Other useful sources:  AMA website – www.marketingpower.com  AMS website – www.ams-web.org  www.trendwatching.com
  160. 160. Research Approaches Observation Ethnographic research Focus Group In-depth Interview Projective techniques Survey Experimentation
  161. 161. Developing the Research Plan: Contact Methods Mail Telephone Personal (arranged or intercept interviews)  Individual or group interviewing  CAPI and CATI On-line (Internet research)  the data are not representative of a target population  people in the target market who do not use the Internet or who don‘t want to answer a questionnaire can bias the results.
  162. 162. Pros and Cons of Online ResearchAdvantages Disadvantages Inexpensive  Small samples Fast  Skewed samples Accuracy of data  Technological Versatility problems  Inconsistencies
  163. 163. Developing the Research Plan: Sampling Plan Sample - representative segment of the How should the Who is to be population sample be surveyed? chosen? (Sampling(Sampl.procedure) Unit) How many should be surveyed? (Sample size)
  164. 164. Developing the Research Plan: Research Instruments Questionnaires  Technological devices  What questions to ask?  Galvanometers  Form of each  Tachistoscope question?  Eye cameras  Closed-end  Audiometers  Open-end  GPS  Wording?  Ordering?
  165. 165. Questionnaire Do‘s and Don‘ts Ensure questions are  Avoid negatives free of bias  Avoid hypotheticals Make questions simple  Avoid words that could be Make questions specific misheard Avoid jargon  Use response bands Avoid sophisticated  Use mutually exclusive words categories Avoid ambiguous words  Allow for ―other‖ in fixed response questions
  166. 166. Additional Information:Question Types - DichotomousIn arranging this trip, did you contact ABCAirlines? Yes  No
  167. 167. Question Types – Multiple ChoiceWith whom are you traveling on this trip? No one Spouse Spouse and children Children only Business associates/friends/relatives An organized tour group
  168. 168. Question Types – Likert ScaleIndicate your level of agreement with thefollowing statement: Small airlines generallygive better service than large ones. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree
  169. 169. Question Types – Semantic Differential ABC AirlinesLarge ………………………………...…….SmallExperienced………………….….InexperiencedModern……………………….…..Old-fashioned
  170. 170. Question Types – Importance ScaleAirline food service is _____ to me. Extremely important Very important Somewhat important Not very important Not at all important
  171. 171. Question Types – Rating Scale ABC Airlines‘ food service is _____.  Excellent  Very good  Good  Fair  Poor
  172. 172. Question Types – Intention to Buy Scale How likely are you to purchase tickets on ABC Airlines if in-flight Internet access were available?  Definitely buy  Probably buy  Not sure  Probably not buy  Definitely not buy
  173. 173. Qualitative Techniques Word Association Sentence completion Third person technique Visualization Brand Personification Laddering
  174. 174. Characteristics of Good MarketingResearch Scientific method Research creativity Multiple methods Interdependence Value and cost of information Healthy skepticism Ethical marketing
  175. 175. Analyzing Marketing Information Information gathered in internal databases and through marketing intelligence and marketing research  may require more analysis Managers may need help in applying the info. to their mktg problems and decisions  Marketing decision support sysytems (MDSS)  ―coordinated collection of data, systems, tools and techniques with supporting software and hardware, by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action‖  marketing and sales software programs  decision models
  176. 176. Interpreting and Reporting FindingsResearcher should present important findings that are useful in the major decisions faced by management. Step 1. Interpret the Findings Step 2. Draw Conclusions Step 3. Report to Management
  177. 177. Appendices-- Marketing metrics are the set of measures that helps marketers quantify, compare, and interpret marketing performance.
  178. 178. Marketing MetricsExternal Internal Awareness  Awareness of goals Market share  Commitment to goals Relative price  Active support Number of complaints  Resource adequacy Customer satisfaction  Staffing levels Distribution  Desire to learn Total number of  Willingness to change customers  Freedom to fail Loyalty  Autonomy
  179. 179. Marketing-Mix ModelingMarketing-mix models analyze data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, tounderstand more precisely the effects of specific marketing activities.
  180. 180. Marketing Measurement Pathway
  181. 181. Marketing Dashboard
  182. 182. Example of some Customer-Performance Scorecard Measures % of new customers to average # % of lost customers to average # % of win-back customers to average # % of customers in various levels of satisfaction % of customers who would repurchase % of target market members with brand recall % of customers who say brand is most preferred
  183. 183. Analyzing Consumer Markets and Buyer Behavior―The most important ingredient in the success of anorganization is a satisfied customer‖
  184. 184. Consumer Buying BehaviorThe central question for marketers : ―How do consumers respond to various marketing efforts the company might use?”
  185. 185. Model of Buyer BehaviorMarketing and Buyer’s Black Box Buyer ResponsesOther Stimuli Buyer Characteristics Product ChoiceMarketing CulturalProduct Social Brand ChoicePrice Personal Dealer Choice PsychologicalPlacePromotionOther Purchase Timing Buyer Decision Process Purchase AmountEconomic Problem recognitionTechnological Information searchPolitical Evaluation DecisionCultural Postpurchase behavior
  186. 186. Factors Influencing Consumer BehaviorCultural Social Personal •Age and Psycho-•Culture •Reference life-cycle logical groups •Occupation •Motivation •Sub- •Economic •Perception BUYERculture •Family situation •Learning •Lifestyle •Beliefs and •Roles attitudes•Social •Personality and and class status self-concept
  187. 187. Factors Influencing Consumer Behavior:Cultural • Culture Cultural Forms a person‘s wants and behavior •Culture • Subculture Groups with shared value systems•Subculture • Social Class Society‘s divisions who share values,•Social class interests and behaviors
  188. 188. Factors Influencing Consumer Behavior:Cultural • Subculture Groups with shared value systems Cultural e.g. Hispanic subculture in the US •Culture•Subculture•Social class
  189. 189. Factors Influencing Consumer Behavior:Cultural • Culture Cultural Forms a person‘s wants and behavior • Subculture •Culture Groups with shared value systems•Subculture • Social Class Society‘s divisions who share values,•Social class interests and behaviors
  190. 190. Factors Influencing Consumer Behavior:Cultural • Social Class Cultural Society‘s divisions who share values, interests and behaviors •Culture  Measured by a combination of occupation, income, education, wealth,•Subculture and other variables  Turkey  introduced first by PIAR•Social class  SES analyses (www.arastirmacilar.org)
  191. 191. Factors Influencing Consumer Behavior: Social • Reference Groups • Membership Social • Aspirational • Opinion Leaders •Reference • Buzz marketing groups • Family •Family • Many influencers • Buyers vs. users•Roles & status • Roles and Status
  192. 192. Factors Influencing Consumer Behavior: Social (cont.) • Ref. Groups : have a direct or indirect influence on the person’s attitudes or behavior Social • Membership Groups  groups •Reference to which a person belongs groups • primary groups • secondary groups •Family • Aspirational Groups  groups•Roles & status to which a person would like to belong
  193. 193. Factors Influencing Consumer Behavior: Social (cont.) • Opinion Leader person within a reference group who exert influence on Social others •Reference • Also called influentials or groups leading adopters • offers advice or information about •Family a specific product or product category,•Roles & status • can be found in all social classes
  194. 194. Groups and Social Networks  Online Social Networks / online communities where people socialize or exchange information and opinions  blogs, social networking sites (facebook), virtual worlds (second life)
  195. 195. Factors Influencing Consumer Behavior: Social (cont.) • The most important consumer- buying organization in the society Social • Roles and relative influence of •Reference family members in buying groups decisions • Buying roles vary in different countries and social classes •Family • Buying roles change with evolving life-styles•Roles & status • joint decision making • women arising as active buyers • increasing role of children
  196. 196. Factors Influencing Consumer Behavior: Social (cont.) • The person‘s position in each group  can be defined in Social terms of both role and status: •Reference • A Role  consists of the groups activities that a person is expected to perform according to •Family the people around him • Each role  carries a status•Roles & status • A Status  is the general esteem given a role by society
  197. 197. Factors Influencing Consumer Behavior: Personal • Family Life Cycle  stages throughout which families pass as they Personal mature over time •Age and life-cycle 1. bachelor stage 2. newly married couples, no children•Occupation 3. full nest 1; youngest child under 6 •Economic 4. full nest 2; youngest child 6 or over situation 5. full nest 3; older married couples with •Lifestyle dependent children•Personality 6. empty nest 1; older married couples no and children with themself-concept 7. empty nest 1; older married couples no children at home; retired 8. solitary survivor, working 9. solitary survivor, retired
  198. 198. Stages in Family Life Cycle1. Bachelor stage: Few financial burdens. Fashion opinion leaders.Young, single, not living Recreation oriented. Buy: basic home equipment,at home furniture, cars, equipment for the mating game; vacations.2. Newly married Highest purchase rate and highest averagecouples: purchase of durables: cars, appliances, furniture,Young, no children vacations.3. Full nest I: Home purchasing at peak. Liquid assets low.Youngest child under six Interested in new products, advertised products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates.4. Full nest II: Financial position better. Less influenced byYoungest child six or over advertising. Buy larger-size packages, multiple-unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos. See text for complete table
  199. 199. Factors Influencing Consumer Behavior: Personal (cont.) • Consumption patterns often Personal shaped by: •Age and life-cycle • occupation &•Occupation •Economic • economic circumstances: situation •Lifestyle • spendable income,•Personality • savings and assets, and • debts,self-concept • attitudes towards spending & saving.
  200. 200. Factors Influencing Consumer Behavior: Personal (cont.) • Consumption patterns often Personal shaped by: •Age and life-cycle • occupation &•Occupation •Economic • economic circumstances: situation •Lifestyle • spendable income,•Personality • savings and assets, and • debts,self-concept • attitudes towards spending & saving.
  201. 201. Factors Influencing Consumer Behavior: Personal (cont.) • Lifestyle  a person‘s pattern of living as expressed in his activities, Personal interests and opinions •Age and • Psychographics  technique of life-cycle measuring lifestyles and developing lifestyle•Occupation classifications •Economic • Major dimensions measured are: situation • Activities (work, hobbies, social •Lifestyle events, entertainment, shopping, sports,vacation)•Personality and • Interests (family, home, job,self-concept recreation, fashion, food, media, achievements) • Opinions (themselves, social issues, politics, business, economics, products, future)
  202. 202. The VALS segmentation system:An 8-part typology
  203. 203. AIOs and Lifestyle Dimensions
  204. 204. Excerpts from AIO InventoryInstructions: Please read each statement and place an “x” in the box that bestindicates how strongly you “agree” or “disagree” with the statement. Agree Disagree Completely CompletelyI feel that my life is moving faster and faster,sometimes just too fast. [1] [2] [3] [4] [5] [6] [7]If I could consider the “pluses” and “minuses,” [1] [2] [3] [4] [5] [6] [7]technology has been good for me. [1] [2] [3] [4] [5] [6] [7]I find that I have to pull myself away from e-mail.Given my lifestyle, I have more of a shortage of [1] [2] [3] [4] [5] [6] [7]time than money.I like the benefits of the Internet, but I often don’t [1] [2] [3] [4] [5] [6] [7]have the time to take advantage of them.
  205. 205. Factors Influencing Consumer Behavior: Personal (cont.) • Personality  a person‘s unique characteristics that lead to relatively Personal consistent and lasting responses to the environment •Age and life-cycle • Brand personality  specific mix of human traits that may be attributable to a• Occupation particular brand •Economic • Self-concept  the self image or general situation picture that people have of themselves •Lifestyle • Person‘s actual self-concept  how she views •Personality herself and • Ideal self-concept  how she would like to view self-concept herself • Others‘ self-concept  how she thinks others see her
  206. 206. Factors Influencing Consumer Behavior: Psychological • Freud’s Theory : Psychological forces shaping people‘s behavior  largely unconsciousPsychological • A person cannot understand fully his/her own motivations •Motivation • Motivation research  looks for hidden and subconscious motivation •Perception • in-depth interviews / laddering • projective techniques (i.e. word association, •Learning sentence completion, picture interpretation, role playing) •Beliefs & attitudes • Maslow’s Theory : Maslow ordered needs based on how pressing they are to the consumer
  207. 207. Psychological FactorsMotivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research is based on Freud. Looks for hidden and subconscious motivation Maslow ordered needs based on how pressing they are to the consumer 226
  208. 208. Factors Influencing Consumer Behavior: Psychological(cont)• Research found: • Consumers resist prunes because prunes are wrinkled looking and remind people of old age. • Men smoke cigars as an adult version of thumb sucking. • Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals. • Women don‘t trust cake mixes unless they require adding an egg, because this helps them feel they are giving ―birth.‖
  209. 209. Maslow‘s Hierarchy of Needs
  210. 210. Factors Influencing Consumer Behavior: Psychological(cont) • Perception  process by which people select, organize and interpret information to form a meaningfulPsychological picture of the world •Motivation 1.Selective attention  tendency of people •Perception to eliminate most of the information to which they are exposed •Learning 2.Selective distortion  to interpret •Beliefs & information in a way that will support what attitudes they already believe 3.Selective retention  to retain only part of the information to which they are exposed
  211. 211. Factors Influencing Consumer Behavior: Psychological(cont) • Learning  changes in a person‘s behavior, arising from experiencePsychological • Learning occurs through the interplay of: drives, stimuli, cues, responses and •Motivation reinforcement •Perception • A drive: strong internal stimulus that calls •Learning for action • Cues: minor stimuli that determine when, •Beliefs & where and how the person responds attitudes • If the experience is rewarding  the response will be positively reinforced
  212. 212. Factors Influencing Consumer Behavior: Psychological(cont) • Through doing and learning  people acquire beliefs andPsychological attitudes  have influence on buying behavior •Motivation • A Belief  descriptive thought that a •Perception person holds about something •Learning • An Attitude  a person‘s consistently •Beliefs & favorable or unfavorable evaluations, attitudes feelings and tendencies toward an object or idea
  213. 213. Factors Influencing Consumer Behavior: Psychological(cont) • Through doing and learning  people acquire beliefs andPsychological attitudes  have influence on buying behavior •Motivation • A Belief  descriptive thought that a •Perception person holds about something •Learning • An Attitude  a person‘s consistently •Beliefs & favorable or unfavorable evaluations, attitudes feelings and tendencies toward an object or idea
  214. 214. The Buying Decision Process• Marketers have to identify: • Who makes the buying decision • The types of buying decisions • The steps in the buying process
  215. 215. Buying Roles – Who makes the buying decision• Initiator  who first gives the idea of buying the product or service• Influencer  whose view or advice influences the decision• Decider  who decide on any component of buying decision• Buyer  who makes the actual purchase• User  who uses the product or sevice purchased
  216. 216. Types of Buying Behavior High Low Involvement InvolvementSignificant Complex Variety-differences between Buying Seeking brands Behavior Behavior Few Dissonance- Habitualdifferences Reducing Buying Buying between brands Behavior Behavior
  217. 217. Stages of the Buying Decision Process Purchase Decision Evaluation Postpurchase of Alternatives Behavior Information Search ProblemRecognition
  218. 218. The Buyer Decision Process Stage 1. Problem Recognition Buyer Needs Arising from:State where the recognizes Internal Stimulibuyer’s needs are (hunger)fulfilled and the a problem orbuyer is satisfied. or External Stimuli a need (friends)
  219. 219. The Buyer Decision ProcessStage 2. Information Search Personal Sources •Family, friends, neighbors •Most effective source of informationCommercial Sources •Advertising, salespeople •Receives most information from these sources Public Sources •Mass Media •Consumer-rating groups •Handling the productExperiential Sources •Examining the product •Using the product
  220. 220. The Buyer Decision ProcessSuccessive Sets Involved in Customer Decision Making
  221. 221. The Buyer Decision ProcessStage 3. Evaluation of Alternatives Consumer May Use Careful Calculations & Logical Thinking Consumers May Buy on Impulse and Rely on Intuition Consumers May Make Buying Decisions on Their Own. Consumers May Make Buying Decisions Only After Consulting Others.Marketers must study buyers to find out how they evaluate brand alternatives
  222. 222. Consumer Evaluation Process• The consumer is trying to satisfy a need• The consumer is looking for certain benefits from the product solution• The consumer sees each product as a ―bundle of attributes‖ • The attributes of interest to buyers vary by product• Consumers differ as to which product attributes they see as most relevant and the importance they attach to each attribute
  223. 223. Consumer Evaluation Process (cont.)• The consumer develops ―a set of brand beliefs‖ about where each brand stands on each attribute (see table, next page)• The set of beliefs about a brand make up “brand image‖• The consumer arrives at attitudes (judgments /preferences) toward different brands through an attribute evaluation procedure.
  224. 224. Example: A Consumer’s Brand Beliefs about Computers Attribute Computer Memory Graphics Size and Capacity Capability Weight Price A 10 8 6 4 B 8 9 8 3 C 6 8 10 5 D 4 3 7 8 Computer A: 0.4(10)+0.3(8)+0.2(6)+0.1(4) = 8.0Choice will be made based on the ―highest perceived value‖
  225. 225. Consumer Evaluation Process (cont.)• Strategies designed to influence buyer decisions: • Redesign the product – real positioning • Alter beliefs about the brand – psychological positioning • Alter beliefs about competitors‘ brands – competitive positioning • Alter the importance weights • Call attention to neglected attributes • Shift the buyer‘s ideas
  226. 226. The Buyer Decision ProcessStage 4. Purchase Decision
  227. 227. The Buyer Decision ProcessStage 5. Postpurchase Behavior Satisfied Customer! Consumer’s Expectations of Product’s Performance --- Product’s Perceived Performance. Dissatisfied Customer
  228. 228. Buyer Decision Process for New Products New Products  Good, service or idea that is perceived by customers as new. Stages in the Adoption Process  Marketers should help consumers move through these stages. 247

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