Marketing Exam #2

To create a proper marketing mix, marketers must understand

That consumer preferences are constantly changing

How consumers make purchase decisions

Consumer behavior

processes a consumers uses to make purchase decisions, aw well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and product use

Value

a personal assessment of the net worth one obtains from making a purchase , or the enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct

Perceived value

the value a consumer expects to obtain from a purchase

Utilitarian value

a value derived from a product or service that helps the consumer solve problems and accomplish task

The consumer decision-making process

Need Recognition

1st stage in the decision- making process

Need recognition is

the result of an imbalance between actual and desired states

want

recognition of an unfulfilled need and a product that will satisfy it

Stimulus

any unit of input affecting one or more of the five senses: sight, smell, taste, touch, hearing

A marketing manager’s objective is

to get consumers to recognize the “want-got gap”

Information Search

2nd stage in the decision-making process

Internal information search

the process of recalling information stored in the memory (could be from earlier advertising or experiences)

External information search

the process of seeking information in the outside environment

Non-marketing-controlled information source

a product information source that is not associated with advertising or promotion

Marketing-controlled information source

a product information source that originates with marketers promoting the product

The Extent of Information Search: 1

The bigger the risk, the more you search and consider alternatives

The Extent of Information Search

The extent to which an individual conducts an external search depends on his or her…

The Extent of Information Search: 2

Knowledge, less likely to search for additional information 

The Extent of Information Search: 3

Prior experience, means everything in our decision to search or not

The Extent of Information Search: 4

Level of interest in the good or service, “do I care”?

evoked set

a group of brands resulting from an information search from which a buyer can choose

Nudge

a small intervention that can change a person’s behavior

Ex: shopping at a convenience store and having to walk to the back for drinks

Evaluation of Alternatives and Purchase

3rd stage in the decision-making process

Evaluation of alternatives and purchase criteria

A consumer will use the information stored in memory and obtained from
outside sources to develop a set of criteria.

The environment, internal information, and external information help consumers
evaluate and compare alternatives.

The process is not always rational

The process is

not always rational

To buy or not to buy

1. Whether to buy
2. When to buy
3. What to buy (product type and brand)
4. Where to buy (type of retailer, specific retailer, online or in store) (Birkenstocks in person)
5. How to pay (and remember, the sale isn’t complete, until it is paid for!)

Three types of purchases: Planned purchase

typically made after the consumer has collected a large amount of information (home, car)

Three types of purchases: Partially planned purchase

typically made when the consumer knows the product category but waits until shopping to choose a specific style or brand (clothing, furniture) (wife at Marshell’s)

Three types of purchases: Impulse or unplanned purchase

often low-priced items or items on sale or purchased with a coupon, sometimes triggered by a nudge (food or snack item)

Brand Loyalty

generally willing to pay more for them

Terms

net 30 - 2%

cash - 5%

n10

n20

Postpurchase Behavior

how will consumer respond to purchase

Cognitive dissonance/Buyers remorse

Regretting a purchase

engage in the 5th P (participation)

Continuum of Consumer buying Decisions

Profit

Rev. - Ex.

Rev

Sales or quantity x price

When consumers have previous experience with a good or service

the level of involvement typically decreases

Involvement is directly related to 

consumer interests and the degree of interest

As the perceived risk (loss of wealth or status, inincreafed anxiety) in purchasing a product increase

so does a consumer’s level of involvement

For high involvement product purchases

marketing managers should engage in extensive and informative promotions

For low involvement product purchases, in-store promotion and targeted mobile ads are important tools

Offering products on a “limited availability” basis is one-way marketers can increase involvement and jump up demand

Ex: airline seats

The consumer decision journey

The “satisfied” customer

those who buy regular, often out of habit, because they are satisfied with the brand’s performance over a long period

The “committed” customer

a more intense, involved, emotional relationship with the brand, often becoming brand ambassadors

Culture

the set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next

Underlying elements of culture are

values, language, myths, customs, rituals, and laws that guide consumer behavior

Culture is:

− Pervasive – so ingrained that we are
unaware of it
− Functional – giving order to society
− Learned – handed down through generations
− Dynamic – adaptive and evolving
− Varies by geography

Subculture

a homogeneous group of people who share elements of the overall culture as well as unique elements of their own group (college aged consumers, new graduates, parents, empty nesters, retired people)

By understanding subcultures

marketers can design special marketing strategies to serve the needs of a subculture

Social class

a group of people in a society who are considered nearly equal in status or community esteem, who regularly socialize among themselves both formally and informally, and who share behavioral norms

Social class is measured as

a combination of occupation, income, education, wealth, and other variables

Social class is important to marketers for two main reasons

often indicates which medium to use for promotion

helps determine where to best distribute products

Reference group

all of the formal and informal groups in society that influence an individual’s purchasing behavior

Primary membership group

a reference group with which people interact regularly in an informal, face-to-face manner, such as family, friends, and coworkers

Secondary membership group

a reference group with which people associate less consistently and more formally than a primary membership group, such as a club, professional group/association, or religious group

Opinion leader

an individual who influences the opinions of others -BIG Today

People often rely on each other’s opinions more than marketing messages when making purchase decisions

marketing managers must persuade opinion leaders to purchase their goods or servicesE

Example of culture

pickup in the midwest compared to the coasts

Price today/lose you tomorrow

cheapest now/not cheaper later

We all have opinions and

rely on others in purchasing decisions

Noise/chaos in the marketplace

is an opportunity for you?

Ex: DEF gas - shortage?

as a marketer you need to 

provide clarity to the chaos

Family has the strongest influence

children learn by observing parents so they shop like their parents

Socialization process

how cultural values and norms are passed down to children

Social Influences on Consumer Buying Decisions: Initiator

suggests or initiates the purchase process

Social Influences on Consumer Buying Decisions: Influencer

offers valued opinions

Social Influences on Consumer Buying Decisions: Decision maker

the family member who actually makes the decision to buy or not to buy

Social Influences on Consumer Buying Decisions: Purchaser

the one who exchanges money for the product, not always the consumer

Social Influences on Consumer Buying Decisions: Consumer

the end user

Social Influences on Consumer Buying Decisions: Sales

probably the biggest thing looked at for successful sales

Business marketing (industrial, business to business, B-to-B, or B2B marketing)

the marketing of goods and services to individuals and organizations for purposes other than personal consuption

Business product (industrial product)

a product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other customers

Consumer product

a product bought to satisfy an individual’s personal wants or needs

The key characteristic distinguishing business products from consumer products is

intending use, not physical form

Content Marketing

a strategic marketing approach that focuses on creating and distributing content that is valuable, relevant, and consistent

Dramatic increase in use of social media, email marketing, search engine optimization, paid search, and display advertising to

increase awareness, build relationships, and pull customers to websites

Increased use of the internet as an effective sales and promotion platform

greater use of applications to provide additional information about customers

Metrics that are useful for increasing the effectiveness of social media: Awareness

the attention that social media attracts, such as the number of followers or fans

Metrics that are useful for increasing the effectiveness of social media: Engagement

the interactions between the brand and the audience, such as comments, retweets, shares, and searches

Metrics that are useful for increasing the effectiveness of social media: Conversions

responsive actions that include everything from downloading a piece of content (like a white paper) to actually making a purchase

Relationship marketing

a strategy for seeking and establishing ongoing partnerships with customer (better margins, longterm sales)

emerged because customers have become more demanding and competition has become more intense-pressuring margins

enables business suppliers to better compete, especially in the digital world. On-line, low cost suppliers targeting your customers

Strategic aliance (strategic partnership)

a cooperative agreement between business firms

(manufactures, manufacturers and customers, manufacturers and suppliers, manufactures and channel intermediaries, and even between competitors)

strategic alliances formed

to strengthen operations and make firms more competitive

strategic alliance forms

licensing or distribution agreements, joint ventures, research and development consortia, and partnerships

A successful alliance is built on: Relationship commitment

a firm’s belief that an ongoing relationship with another firm is so important that the relationship warrants maximum efforts at maintaining it indefinitely

A successful alliance is built on: Trust

the condition that exists when one party has confidence in an exchange partner’s reliability and integrity

Relationships in other cultures

Japan, personal relationships can develop into formal relationship between companies

Ex: Wal-Mart and their grocery business; how did this work?

Keiretsu

a network of interlocking corporate affiliates, based on trust and goodwill

Producers

includes profit-oriented individuals and organizations that use purchased goods and services to product other products, to incorporate into other product, or to facilitate the daily operations of the organization

Original equipment manufacturers (OEMs)

individuals and organizations that buy business goods and incorporate them into the products they produce for eventual sale to other producers or consumer

Ex: Ford, Toyota, John Deere, Boeing

Resellers

includes retail and wholesale businesses that buy finished goods and resell them for a profit

Ex: Walmart, Costco, grocerystores

Governments

includes thousands of federal, state, and local buying units

can be overwhelming and tedious to market to government agencies, but may result in lucrative contracts and lasting, rewarding relatinship

Federal government

buys goods and services valued at more than $875 billion per year, making it the world’s largest customer

can be viewed as marketing to a combination of several large companies with overlapping responsibilities and thousands of small independent units

State, Country, and City Government

generally simpler and less frustration than marketing to the federal government

Institutions (schools, hospitals, colleges and universities, churches, labor unions, fraternal organizations, civic clubs, foundations, and other so-called nonbusiness organizations)

seek to achieve goals other than the standard business goals or profit, market share, and return on investment

Derived Demand

the deman for business products is called derived demand because organizations buy products to be used in producing their customers’ products

Inelastic demand

the demand for many business products is inelastic with regard to price, meaning that an increase or decrease in the price of the product will not simnifically affect demand for the product

Joint Demand

joint demand occurs when two or more items are used together in a final product. Demand for vehicles goes up, demand for tires and still go up

Fluctuating (elastic) demand

The demand for business products tends to be less stable

• a small increase or decrease in consumer demand can produce much larger change in demand for the facilities and equipment needed to make the consumer product