CHAPTER 11

Understanding Marketing Processes and Consumer Behavior

Understanding Marketing Processes and Consumer Behavior

Outline What Is Marketing?

Target Marketing and Market Segmentation

Understanding Consumer Behavior

Organizational Marketing and Buying Behavior

The International Marketing Mix

Small Business and the Marketing Mix

What Is Marketing?

The process of planning and executing the

conception, pricing, promotion, and distribution of

ideas, goods, and services to create exchanges

that satisfy individual and organizational objectives

The 4 P’s of Marketing Product, Price, Promotion

and Place.

MarketingGoods, Services, & Ideas Consumer Goods

Products purchased by consumers for personal use

Industrial Goods

Products purchased by companies to produce other products

Services

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

Relationship Relationship MarketingMarketing

Marketing strategy Marketing strategy that emphasizes that emphasizes lasting relationships lasting relationships with customers and with customers and supplierssuppliers

The Marketing Environment External Environment

Outside factors that influence marketing programs by posing opportunities or threats

Five environmental factors: Political-Legal Environment Social-Cultural Environment Technological Environment Economic Environment Competitive Environment

The External Marketing Environment

10 - 10 - 66

The Firm and Its Marketing Plan Plans Strategies Decisions

CompetitiveEnvironment

Political & LegalEnvironment

Social &Cultural

Environment

EconomicEnvironment

TechnologicalEnvironment

Competitive Environment   Substitute Product

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

Brand Competition

Competitive marketing that appeals to consumer perceptions of similar products

International Competition

Competitive marketing of domestic products against foreign products

Planning & Executing Marketing Strategy Marketing Managers

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

Marketing Plan

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

Developing the Marketing Plan 

Setting Goals for Performance

The Marketing Mix

ProductProduct

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

Product DifferentiationProduct Differentiation

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

The combination of product, pricing, promotion, and distribution strategies used to market products

The Marketing Mix

PricingPricing

Selecting the most appropriate price at which to sell a productSelecting the most appropriate price at which to sell a product

PromotionPromotion

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

Place (Distribution)Place (Distribution)

Getting products from producers to consumersGetting products from producers to consumers

The combination of product, pricing, promotion, and distribution strategies used to market products

Target Marketing & Market Segmentation

Target MarketTarget Market

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

Market SegmentationMarket Segmentation

Process of dividing a market into categories of Process of dividing a market into categories of customer types customer types

Identifying Market SegmentsGeographic VariablesGeographic Variables

Geographical units that may be considered in developing a Geographical units that may be considered in developing a segmentation strategysegmentation strategy

Demographic VariablesDemographic Variables

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

Psychographic VariablesPsychographic Variables

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

Product Use VariablesProduct Use Variables

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

Marketing Research

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

Market Research and the Marketing Process

10 - 10 - 1414

MARKETINGMARKETINGRESEARCHRESEARCH

Controllable Marketing Variables

• Product• Pricing• Promotion• Place

Environmental Factors

• Economic• Technological• Competitive• Political & Legal• Social & Cultural

• Consumers• Employees

• Investors• Suppliers

• Local Communities

Marketing Managers• Market Segmentation• Target Market Segmentation

• Marketing Plan• Goals for Performance

Assessing Information

Needs

Providing Information

Making Decisions

Stakeholders

The Research Process Study the Current Situation

Select a Research Method

Collect Data

Analyze the Data

Prepare a Report

Secondary DataSecondary DataData readily available as a Data readily available as a result of previous researchresult of previous research

Primary DataPrimary DataData developed Data developed through new researchthrough new research

Research Methods ObservationObservation

Market research technique that involves simply watching and Market research technique that involves simply watching and recording consumer behaviorrecording consumer behavior

SurveySurvey

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

Focus GroupFocus Group

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

ExperimentationExperimentation

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

UnderstandingConsumer Behavior

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

Influences on Consumer Behavior Psychological Personal Social Cultural

Brand LoyaltyBrand Loyalty

Pattern of regular consumer purchasing based Pattern of regular consumer purchasing based on satisfaction with a producton satisfaction with a product

The Consumer Buying ProcessPersonal & Environmental Factors

PsychologicalPsychological PersonalPersonal SocialSocial CulturalCultural

Stages of the Consumer Buying ProcessStages of the Consumer Buying Process

Evaluation of Alternatives

Which are comfortable?

Which are affordable?

How will others react to them?

Evaluation of Alternatives

Which are comfortable?

Which are affordable?

How will others react to them?

Information Seeking

Search for stores, styles,

prices, opinions of

others

Information Seeking

Search for stores, styles,

prices, opinions of

others

Problem Recognition

Need to replace old

shoes

Problem Recognition

Need to replace old

shoes

Purchase DecisionChoose

rationally or emotionally

Purchase DecisionChoose

rationally or emotionally

Postpurchase DecisionObserve

reactions of others; test durability,

compare with older shoes

Postpurchase DecisionObserve

reactions of others; test durability,

compare with older shoes

Marketing Factors

ProductProduct PricingPricing PromotionPromotion PlacePlace

10 - 10 - 1919

The Consumer Buying Process Problem/Need Recognition   Information Seeking Evaluation of Alternatives

– Emotional– Rational

Purchase Decision Postpurchase Evaluations  

Organizational Marketing & Buying Behavior

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

Organizational MarketsIndustrial Market 

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

Reseller Market

Intermediaries who buy and resell finished goods

Government Market

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

Institutional Market

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

Organizational Buying Behavior Demand

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

Differences in Demand

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

Derived Demand

Demand for industrial products that results from demand for consumer products

Inelastic Demand

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

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

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

SpecialistsIndustrial buyers are company specialists in a line of items

ExpertsIndustrial buyers who are experts about the products they are buying

Stages in the Buying ProcessStages in the Buying Process

Postpurchase Evaluation of product and

evaluation of supplier

Postpurchase Evaluation of product and

evaluation of supplierPurchase Decision

Purchase Decision

Information Seeking

Information Seeking

The Industrial Buying Process

10 - 10 - 2525

Problem Recognition

Problem Recognition

Developing Product

Recognition

Developing Product

Recognition

Evaluation of Alternatives using

product specification

Evaluation of Alternatives using

product specification

Differences in Decision Making

Developing Product Specifications

Evaluating Alternatives

Making Postpurchase Evaluations

Differences in the Buyer-Seller Relationship

The InternationalMarketing Mix

International Products

International Pricing

International Promotion

International Distribution

Small Business and the Marketing Mix

Small-Business Products

Small-Business Pricing

Small-Business Promotion

Small-Business Distribution