MM 1.00MM 1.00Understanding Marketing, Understanding Marketing, Customer/Client/Business Customer/Client/Business Behavior, and Marketing Behavior, and Marketing PlanningPlanning

1.03 1.03 Acquire foundational Acquire foundational

knowledge of knowledge of customer/client/business customer/client/business

behavior to understand what behavior to understand what motivates decision-makingmotivates decision-making

MBA 5-9MBA 5-9DefinitionsDefinitions

Behavior – a response of an individual or Behavior – a response of an individual or group to action, environment, person, or group to action, environment, person, or stimulusstimulus

Perception - The process by which people Perception - The process by which people translate sensory impressions into a coherent translate sensory impressions into a coherent and unified view of the world around them. and unified view of the world around them.

Drive – an internal force that results in actionDrive – an internal force that results in action

Definitions cont.Definitions cont.Cues – something that happens or is Cues – something that happens or is

said which makes something start said which makes something start happeninghappening

Attitudes –evaluations, feelings, and Attitudes –evaluations, feelings, and tendencies toward an object or ideatendencies toward an object or ideaLearned through experience and Learned through experience and

interactions interactions Beliefs – a descriptive thought about a Beliefs – a descriptive thought about a

brand or productbrand or productExpectations – what people think will Expectations – what people think will

happen or want to happenhappen or want to happen

Role of Needs and WantsRole of Needs and Wants

What is the difference?What is the difference?See handout or read Needs into See handout or read Needs into

Wants on page 207 in Wants on page 207 in Marketing Marketing DynamicsDynamics textbook. textbook.

What do needs and wants have to do What do needs and wants have to do with behavior?with behavior?Needs and wants are stimuliNeeds and wants are stimuliStimuli can drive behaviorStimuli can drive behavior

Needs vs. Wants Needs vs. Wants cont.cont.

Activity: Individually categorize products Activity: Individually categorize products as either needs or wants. Be prepared to as either needs or wants. Be prepared to discuss your reasons why.discuss your reasons why.

When can a need change into a want?When can a need change into a want?Do you market needs the same way as Do you market needs the same way as wants?wants?Can you effectively market a want as a Can you effectively market a want as a need?need?

Selective processes that Selective processes that consumers use to respond to consumers use to respond to

stimulistimuliMarketers believe consumers follow Marketers believe consumers follow

a 6-step decision making process:a 6-step decision making process:Awareness of need or problemAwareness of need or problemInformation searchInformation searchEvaluation of optionsEvaluation of optionsDecision to buyDecision to buyPurchasePurchasePost-purchase evaluationPost-purchase evaluation

Selective processes contd.Selective processes contd. There are 4-levels of purchase decisions:There are 4-levels of purchase decisions:

ImpulseImpulse – made with no prior planning or – made with no prior planning or research [example: buying a soda at checkout research [example: buying a soda at checkout (POS) on a hot day](POS) on a hot day]

Routine (Habitual)Routine (Habitual) – made quickly and without – made quickly and without much thought (example: purchasing same much thought (example: purchasing same deodorant)deodorant)

LimitedLimited – made with some research and planning – made with some research and planning (example: checking reviews & (example: checking reviews & Consumer ReportsConsumer Reports before purchasing a new laptop)before purchasing a new laptop)

ExtensiveExtensive – involves a great deal of research – involves a great deal of research and planning (example: purchasing your first car)and planning (example: purchasing your first car)

Difference between attitudes Difference between attitudes and beliefsand beliefs

AttitudesAttitudes Are more subjectiveAre more subjective Can change from Can change from

person to personperson to person A state of mindA state of mind An opinionAn opinion Can evolve Can evolve

(change)(change)

BeliefsBeliefs What we think the What we think the

facts arefacts are What you take to be What you take to be

truetrue Beliefs can be Beliefs can be

mistakenmistaken Beliefs can change Beliefs can change

over time (evolve)over time (evolve) Most will defend their Most will defend their

beliefs to the endbeliefs to the end

Cultural influences on buying Cultural influences on buying behaviorbehavior

The culture that you grew up in provides The culture that you grew up in provides you with an initial set of values, beliefs, you with an initial set of values, beliefs, and behaviorsand behaviors

Provides you with attitudes toward Provides you with attitudes toward products, buying, credit, and shoppingproducts, buying, credit, and shopping

May also affect your ideas of what is May also affect your ideas of what is appropriate to buy, wear, and doappropriate to buy, wear, and do

Don’t just think of ethnic cultures…. there Don’t just think of ethnic cultures…. there are also teenage cultures, California, are also teenage cultures, California, Southern, East Coast, Corporate, Southern, East Coast, Corporate, Religious, gang, etc. (think Religious, gang, etc. (think Demographics)Demographics)

Social influences on buying Social influences on buying behaviorbehavior

Social class – the ranking of people Social class – the ranking of people based on wealth, education, ancestry, based on wealth, education, ancestry, and powerand power

Conveyed through your family, friends Conveyed through your family, friends (peer pressure), classmates, and other (peer pressure), classmates, and other social or professional groups. Also social or professional groups. Also pushed through media such as TV and pushed through media such as TV and movies.movies.

A person’s individual differences A person’s individual differences impact consumer behaviorimpact consumer behavior

Age – life stageAge – life stageEducationEducationOccupationOccupationEconomic situationEconomic situationLifestyleLifestylePersonalityPersonalitySelf-conceptionSelf-conception

(Demographics)(Demographics)

Psychological influences impact Psychological influences impact consumer behaviorconsumer behavior

Influences that come from within a personInfluences that come from within a personAccording to psychologists our needs are According to psychologists our needs are

responsible for many of our purchasesresponsible for many of our purchasesA need is a A need is a lacklack within. If the need is not within. If the need is not

satisfied, it turns into a satisfied, it turns into a drivedriveSee Maslow’s Hierarchy of needsSee Maslow’s Hierarchy of needsPsychology is part of what makes Psychology is part of what makes

marketing work!marketing work!

Situational influences that Situational influences that impact consumer behaviorimpact consumer behavior

Influences that come from the Influences that come from the environmentenvironmentGovernment, competitors, even customersGovernment, competitors, even customers

Weather, physical location of the storeWeather, physical location of the storeTime of day Time of day Visibility of advertising and other forms Visibility of advertising and other forms

of promotionof promotionThe buyer’s mood, physical condition, The buyer’s mood, physical condition,

and financial condition at the time and financial condition at the time

Consumer vs. business customer Consumer vs. business customer buying behaviorbuying behavior

ConsumerConsumer Major influencesMajor influences

External: groups, culture, External: groups, culture, situationsituation

Marketing: 4P’s and Marketing: 4P’s and serviceservice

Internal: perception, Internal: perception, attitude, knowledge, attitude, knowledge, personality, lifestyle, personality, lifestyle, roles, and involvementroles, and involvement

Impulse buying is more Impulse buying is more prevalentprevalent

BusinessBusiness Major influences:Major influences:

How decisions are madeHow decisions are made Existence of experienced Existence of experienced

purchaserspurchasers Time needed to make a Time needed to make a

decisiondecision Size of purchasesSize of purchases Number of buyersNumber of buyers Type of promotional Type of promotional

effort needed to reach effort needed to reach the buyerthe buyer

Decisions can take Decisions can take weeks, months, yearsweeks, months, years

How do Environmental How do Environmental Influences affect business Influences affect business

customers?customers?Changes in laws and regulationsChanges in laws and regulationsCompetitors’ actionsCompetitors’ actionsEvolving customer desiresEvolving customer desiresChanges in the economyChanges in the economy

How do Organizational How do Organizational Influences affect business Influences affect business

customers?customers?Organizational influences are those Organizational influences are those

that occur within the company or that occur within the company or organizationorganizationHow is the company set up?How is the company set up?Have there been any changes to the Have there been any changes to the

reporting structure? (Vertical or reporting structure? (Vertical or Horizontal)Horizontal)

What are the company’s goals and sales What are the company’s goals and sales forecasts for the year?forecasts for the year?

Marketing strives to satisfy the Marketing strives to satisfy the company’s and individual’s company’s and individual’s

needsneedsTo effectively market products to a To effectively market products to a

business, marketers focus on business, marketers focus on bothboth the needs of the business and the the needs of the business and the individuals making the buying individuals making the buying decisiondecision

Satisfying the business individuals’ Satisfying the business individuals’ wants and needs in addition to the wants and needs in addition to the company’s keeps the buyers coming company’s keeps the buyers coming back when they need moreback when they need more

MBA 5-11MBA 5-11Actions for SuccessActions for Success

While making and selling products While making and selling products can make a company money, the can make a company money, the company needs to be managed company needs to be managed properly to become and stay properly to become and stay successful.successful.

4 Steps to successful management:4 Steps to successful management:PlanPlanOrganizeOrganizeImplementImplementControlControl

Aligning strategies with business Aligning strategies with business goalsgoals

Step 1 of successful management requires Step 1 of successful management requires good planninggood planning Planning requires the managers to look at the Planning requires the managers to look at the

present situation and think about where they present situation and think about where they want to go in the futurewant to go in the future

Aligning the actions (strategies) of the Aligning the actions (strategies) of the company with the goals is crucial to ensuring company with the goals is crucial to ensuring successsuccess

First to market requires a great R&D departmentFirst to market requires a great R&D departmentBeing an effective follower into a market means you Being an effective follower into a market means you

must have a great MIM system and solid PSM must have a great MIM system and solid PSM capabilities capabilities

Proper Employee TrainingProper Employee Training

If employees don’t understand the If employees don’t understand the company, its products and its company, its products and its customers the business will falter.customers the business will falter.Even well educated and experienced Even well educated and experienced

employees need trainingemployees need trainingGetting everyone n the organization to Getting everyone n the organization to

understand the competitive understand the competitive environment the same way is crucial environment the same way is crucial building a successful companybuilding a successful company

Consistency mattersConsistency matters

Importance of a business’s Importance of a business’s reputationreputation

Current and potential customers often Current and potential customers often make buying decisions based on how make buying decisions based on how they perceive the company and its they perceive the company and its productsproducts

Public relations (part of Promotion) is Public relations (part of Promotion) is important to developing and keeping a important to developing and keeping a good reputation and a good reputation good reputation and a good reputation is important to present and future salesis important to present and future sales

Negative publicity can damage a Negative publicity can damage a company’s profitabilitycompany’s profitability

Honest and clear Honest and clear communicationcommunication

This is important inside and outside a This is important inside and outside a companycompanyInside the company, it ensures that Inside the company, it ensures that

everyone knows what the goals are and everyone knows what the goals are and their individual roles their individual roles

Outside the company, it helps the Outside the company, it helps the customer develop realistic expectations customer develop realistic expectations as to what the company can do and as to what the company can do and when it will be donewhen it will be done

Excellent Customer ServiceExcellent Customer Service

Marketing is about satisfying the Marketing is about satisfying the customer’s wants and needscustomer’s wants and needsCustomer service provides the initial Customer service provides the initial

contact with the customer and helps contact with the customer and helps them pick the best productthem pick the best product

Customer service also is involved in the Customer service also is involved in the follow-up after the purchasefollow-up after the purchaseAre there any issues that have occurred?Are there any issues that have occurred?Is the customer really satisfied?Is the customer really satisfied?What can we do to make things better?What can we do to make things better?

Touch PointsTouch Points

A touch point is when a customer comes A touch point is when a customer comes into contact with the company’s productsinto contact with the company’s productsThis can be through an advertisement This can be through an advertisement

(billboard, TV, radio, newspaper/magazine)(billboard, TV, radio, newspaper/magazine)It can be seeing the product on a store shelfIt can be seeing the product on a store shelfIt can be seeing/hearing a review of the It can be seeing/hearing a review of the

product by a media source (think about a product by a media source (think about a movie review)movie review)

Inform, Remind, Persuade (Promotion)Inform, Remind, Persuade (Promotion)

Reasons people buyReasons people buyBuyers often fall into two categories:Buyers often fall into two categories:

RationalRationalEmotionalEmotional

The best sales people use a The best sales people use a combination of the two reasonscombination of the two reasonsEven a person making a logical buying Even a person making a logical buying

decision often is influenced by emotional decision often is influenced by emotional reasons (needs a car but wants a red reasons (needs a car but wants a red sports car)sports car)

Emotional buyers often like having a Emotional buyers often like having a logical reason or two to justify his/her logical reason or two to justify his/her purchasepurchase

Corporate ResponsibilityCorporate ResponsibilityCorporate responsibility is all about Corporate responsibility is all about

doing the “right thing” in the eyes of doing the “right thing” in the eyes of societysocietyInstitutional promotion is focused on Institutional promotion is focused on

promoting the company in the eyes of the promoting the company in the eyes of the communitycommunity

Minimizing pollutionMinimizing pollutionCaring for employees (good pay and Caring for employees (good pay and

benefits)benefits)Donating to the local community (little Donating to the local community (little

league sponsorships, medical research league sponsorships, medical research grants, scholarships for students, donations grants, scholarships for students, donations to schools, etc.)to schools, etc.)

Effects of taking positive Effects of taking positive actionsactions

Increasing efficiency – reduces costs, Increasing efficiency – reduces costs, faster deliver times, lower pricesfaster deliver times, lower prices

Brand value - insulates the product Brand value - insulates the product from pricing fluctuations, stabilizes from pricing fluctuations, stabilizes demand, attracts new customersdemand, attracts new customers

Market share – the percentage (%) of Market share – the percentage (%) of the whole industry’s sales that the the whole industry’s sales that the company controls, building company controls, building marketing share often increases marketing share often increases profitabilityprofitability

Effects of taking positive Effects of taking positive actions actions cont.cont.

Customer loyalty (sometimes called Customer loyalty (sometimes called patronage) – limits the negative patronage) – limits the negative effects of strong competitor actions, effects of strong competitor actions, gives the company time to improve gives the company time to improve its products or customer serviceits products or customer service

Enhanced business reputation – Enhanced business reputation – builds customer loyalty, market builds customer loyalty, market share, and brand valueshare, and brand value

Negative company actions that Negative company actions that should be avoidedshould be avoided

Not keeping promises to customers Not keeping promises to customers = their not being satisfied= their not being satisfied

Delivering low quality products will Delivering low quality products will result in customer complaints and result in customer complaints and lost future sales, high returns and lost future sales, high returns and increased costs of doing businessincreased costs of doing business

High-pressure sales = customers High-pressure sales = customers buying the wrong products buying the wrong products sometimes and increased returnssometimes and increased returns

Negative company actions that Negative company actions that should be avoided should be avoided cont.cont.

Acting unethically – taking advantage Acting unethically – taking advantage of customers, employees, vendors, of customers, employees, vendors, and/or breaking laws will result in and/or breaking laws will result in future lost sales and possibly high future lost sales and possibly high returnsreturns

Responding inappropriately to crises – Responding inappropriately to crises – raising prices unfairly after a disaster, raising prices unfairly after a disaster, not taking responsibility for mistakes, not taking responsibility for mistakes, failing to deliver on promises madefailing to deliver on promises made

Failing to provide what customers Failing to provide what customers want = loss of businesswant = loss of business

Customer satisfaction vs. Customer satisfaction vs. customer loyaltycustomer loyalty

What is the difference?What is the difference?

Satisfaction looks at the customer’s Satisfaction looks at the customer’s feelings during and after a specific feelings during and after a specific purchase (generally short-term)purchase (generally short-term)

Loyalty addresses how the customer Loyalty addresses how the customer feels about the product and/or company feels about the product and/or company over the long-termover the long-term