it is beneficial for marketers to find what influences consumer purchasing what consumers buy why...
TRANSCRIPT
CONSUMER BUYING BEHAVIOR,PRICING, AND ADVERTISING
CONSUMER BUYING BEHAVIORS
It is beneficial for marketers to find what influences consumer purchasing
What consumers buy Why they buy the things they buy Where they buy When they buy How they buy
CONSUMER BUYING BEHAVIORS
Cultures The behaviors and beliefs characteristic of a particular
social, ethnic, or age group An important factor for influencing a person's wants
and needs Society, Family shapes our values, perceptions,
expectations, and material wants Every society has its own culture, those wants, needs,
and buying behaviors differ from those in other cultures
Subcultures Groups of people who share specific value systems
based on their common life experiences and situations Nationalities, religions, racial groups
CONSUMER BUYING BEHAVIORS
Social Class The division of groups in society based upon certain kinds of
similarities Measured by income, occupation, education, wealth
A luxury car company will most likely only market to those in a high level economic class due to affordability and the pressures and desires of people in that class
Groups and Networks Shared interests, work in the same industry, shared common
goals A casual soccer team may influence you on health interests, new
sports gear, diet, new apps for your phone Marketers may pick people who play casual sports as their target
market based on these type of influences Social Networks (online)
Introduction to movies, bands, restaurants your friends like Allows marketers to advertise to consumers based on their interests and
likes
CONSUMER BUYING BEHAVIORS
Family Can be considered a subculture Shape who we are
Parents frugalness Parents work ethics Economic rough times or high times
Directly influence our spending power, resources and immediate and long-term needs
A new baby changes your buying behavior, less nights out to dinner, saving up for a mini van, more advil!
Personal Factors Age, stage in life, job, economic situation, lifestyle,
personality Body Media Monitor versus Video Games Dress shirts and ties versus t-shirts Manicures
CONSUMER BUYING BEHAVIORS
Motive A need that is pressing enough to direct
us to seek satisfaction of that need Biological - hunger, thirst Psychological - self-esteem, desire for
recognition
CONSUMER BUYING BEHAVIORS
Maslow’s Hierarchy of Needs Some people are driven more by basic needs like personal
safety while others are motivated by esteem or social recognition
5 Categories of Human Needs1. Physiological needs - like hunger, thirst2. Safety needs - security, protection3. Social needs - sense of belonging, love4. Esteem needs - self-esteem, social status5. Self-actualization - self-improvement and self-realization
We are first motivated by our most basic of needs physiological needs for food and drink
Once that level of need has been satisfied, we look to fulfill the next level of need
Our safety and protecting ourselves and those we care about, etc
THE BUYER DECISION PROCESS
THE BUYER DECISION PROCESS
THE BUYER DECISION PROCESS
Stage 1: Need Recognition An individual recognizes a need or desire for the value
offered by a product or service Can be stimulated by something internal
Hunger, taste Can be stimulated by something external
An ad on TV
Stage 2: Information search Once a need is recognized a consumer may buy the
product immediately but if it is a higher priced product, they may search for further information before buying Talking to family or friends Paying closer attention to ads for such products Extensive research
THE BUYER DECISION PROCESS
Stage 3: Evaluation of Alternatives Information has been gathered and a choices are to be
evaluated The consumer's perception of a brand can influences his/her
buying decisions If it is well known or has a good/bad reputation
Stage 4: Purchase Decision Once alternatives are evaluated a consumer usually makes
the purchase Something can change a consumers mind at the last minute
A recent conversation Something in the news A good or bad day
A raise may push to the more expensive alternative A job loss can cancel the purchase altogether or change it to a less
expensive alternative
THE BUYER DECISION PROCESS
Stage 5: Post Purchase Behavior Consumer buying behavior doesn't end with the
purchase Marketers need to keep customers happy with CRM For major purchases, buyers can feel discomfort
caused by post-purchase conflict Did they make the right choice ?
Feelings of excitement and regret can happen at the same time
Companies try to make consumer post-purchase experiences for these purchases favorable Customer support, product support, quality-assurance
NEW PRODUCTS
Different types of consumers behave differently in their willingness to purchase a new product
Innovators Somewhat adventurous in their decision making Want to be the amongst the first to try and use
new products
Laggards Conservative about adopting new products Wait to make purchases until after the product
has been tested by other consumers
NEW PRODUCT DEVELOPMENT
Original products and improved and modified versions of existing products
Development of new products follow 8 steps:1. Idea Generation2. Idea Screening3. Concept Development and Testing4. Marketing Strategy Development5. Business Analysis6. Product Development7. Test Marketing8. Commercialization
NEW PRODUCT DEVELOPMENT
1. Idea Generation The systematic search for new product ideas To generate a large number of ideas, typically without
imposing significant restrictions on which ideas might be most acceptable, plausible, or profitable
Brainstorms internally Company wide or specific groups
External resources Competitors, suppliers, distributors
2. Idea Screening The first idea-reducing step in new product
development. Companies identify which of the ideas from the idea-
generation step are the most promising
NEW PRODUCT DEVELOPMENT
3. Concept Development and Testing Product concepts are developed after the screening process
A detailed version of a new product idea Multiple concepts are chosen
Concepts are tested with select target consumers See how each concept resonates with the target consumer to
determine which concept will be most successful
Example:Patagonia wants to expand into the health/fitness market, in order to find what is most appealing to these consumers they develop the following concepts and then test each concept against their target consumers
Patagonia power bars Patagonia weights Patagonia fitness monitors Patagonia yoga line
NEW PRODUCT DEVELOPMENT4. Marketing Strategy DevelopmentPart 1 - Forecasts early revenue potential for the product Description of the target market Value proposition Sales Market share Profit goals for the first several years
Part 2 – Determines the initial costs of bringing the new product to market The planned price Distribution Marketing budget for the first year Design and Features
Part 3 – Determines the long-term profit potential of the product The planned long-term sale Long term profit goal Marketing mix strategy
NEW PRODUCT DEVELOPMENT
5. Business Analysis Conducted to understand the required resource
investment needed to successfully introduce a new product to market
Sales forecasts based on sales history of similar products Based on market surveys
Related costs are evaluated within the company Marketing Research and development (R&D) Operations Accounting finance functions of the organization
6. Product Development Development of the actual product Different versions may be created Testing on the actual product is performed internally
NEW PRODUCT DEVELOPMENT
7. Test Marketing The product and marketing program are introduced into a
limited market setting Marketers test the product and its entire marketing program
before going through the expense of a full introduction in the market Targeting and positioning strategies Advertising Distribution Pricing Branding Packaging Budget levels
8. Commercialization The introduction of a new product into the market
PRICE AND PRICING
PRICE AND PRICING
Price What buyers must give up in order to
gain the benefits of having or using a product or service
The amount of money that customers must pay in order to acquire a product
Price is the only part of the marketing mix that produces revenue All others parts represent costs
COST AND PROFITABILITY
Cost What must be given up in order to run a
business or to develop, produce, distribute, promote, and sell a product or service
In order to be profitable the revenue generated by a product must exceed the costs incurred to provide it
Businesses incur two kinds of costs Fixed Variable
COST AND PROFITABILITY
Fixed Costs Overhead Does not vary with production or sales levels, these
costs will stay the same regardless of how much a company produces or sells Rent, heat, interest on loans, and executive salaries
Variable Costs Will fluctuate directly with the level of production
If demand increases the variable costs will increase in order to satisfy demand
Total Costs The sum of fixed costs plus variable costs
PRICE AND PRICING
Customer’s Perception of Value
A customer’s understanding of the benefits a product or service offers
The value gained by purchasing the product must be more than the price paid for the product
If the price for a product exceeds the idea of value, customers are not going to buy it
Customer perception is critical in influencing a product's price and “price ceiling” The highest price level a product will reach at any
given time Marketing helps out with pricing by influencing a
favorable view on a customer’s perceived value
PRICING STRATEGIES
Cost-Based Pricing Prices are set based on the costs for
producing, distributing, and selling the product
These costs help set the “price floor” The lowest price a product is available at
any given time
1. Cost-Plus Pricing2. Target Profit Pricing3. Break Even Pricing
PRICING STRATEGIES
Cost-Plus Pricing Adding a standard markup to the cost of
producing a product A lemonade stand adds $.25 to each glass as
lemonade A shoemaker adds a standard $20 to each
pair of shoes Popular strategy with many companies
The focus is on controllable factors like costs This strategy ignores demand and competitor
pricing Demand is an uncontrollable factor
PRICING STRATEGIES
Target-Profit Pricing The business tries to determine the price of a product/service
in a way so they hit their target profit Analysis of total cost and total revenue at different sales volume
levels The company decides how much profit it hopes to make and
sets its production and sales goals at that level Companies test different pricing scenarios and target profit
levels This strategy fails to consider both the customer's perception of
value and the relationship between price and demand
Break Even Pricing A variation of target-profit pricing The target is set at the company breaking even on the cost vs.
revenue
HOMEWORK
Group Combine everyone’s SWOT analysis for one group SWOT
Hand in by end of class What is your positioning Statement?
Hand in by end of class Each person to do 1 company goal and at least 2
objectives for your goal Hand in next Monday
Individual How are you going to price your boat service?
What strategy will you use? What is the actual price?
Goals and Objectives for your business unit At least 3 goals, at least 2 objectives for each goal