marketing exam 2 ucf

consumer decision process

1. recognizing we have a need

2. search for information

3. evaluating alternatives

4. purchase & consumption of product

5. post purchase (how did we feel about it)

need recognition

-needs vs wants

-functional needs (transportation for a car, it does what it's supposed to do)

-psychological needs (goes beyond fulfilling the basic need, what you WANT, specifics)

search for information

-internal search for info (relying on what we know first, i love cava so if im hungry let's go there cuz i know i like it)

-external search for info (searching online, going to friends)

factors affecting consumers search process

perceived benefits vs. perceived costs

depending on the benefits vs costs are, that'll determine how long you do your information search

some people can't get over this step...

locus of control

another thing that can affect how long the search for info occurs is the perception of where your control of the decision occurs

internal locus: more search activities (all your choice where you go to school, so you do more searching!)

external locus: fate/external factors (not having control over where you went to school, so you didn't have to search for your school)

actual or perceived risk

example: car exploded, need new

-performance risk (worried next car will have same problems)

-financial risk (can end up paying more than a car is worth)

-social risk (buying wrong car, how will others view your car?)

-physiological risk (safety)

-psychological risk (went through trauma)

evaluation of alternatives: attribute sets

car example

-universal (every car ever made)

-retrieval (what cars can you remember, where car brands want to be!)

-evoked (pushed to purchase, willing and capable of purchasing)

evaluation of alternatives

-evaluative criteria (how will i evaluate these things like categorizing, evaluating in color size taste price etc)

-determinant attributes (determined if we buy it or not, what a car must have like ac carplay)

purchase & consumption

Increase Conversion Rate

converting attention to buying

-Reduce real or virtual abandoned carts

-Merchandise in stock

-Reduce the actual wait time

post purchase

-customer satisfaction

-post purchase cognitive dissonance

-customer loyalty

post purchase- customer satisfaction

-develop realistic expectations

-demonstrate correct product use

-stand behind the product or service

-encourage customer feedback

-periodically make contact with customers and thank them for their support

post purchase cognitive dissonance (buyers remorse)

more likely for products that are:

-expensive

-infrequently purchased

-don't work as intended

-associated with high levels of risk

firms attempt to reduce it by reinforcing the decision:

-return policies

-thank you letters

-congratulations letters

-tags on garments

post purchase customer loyalty

marketers attempt to solidify a loyal relationship

firms use analytics software & customer relationship management programs to acquire & retain loyal customers

Post purchase undesirable consumer behavior

negative word of mouth, rumors

-personal blogs, twitter, corporate websites

companies use listening software to identify negative word of mouth

if a customer believes a complaint will result in positive action, negative word of mouth is less likely

factors influencing the consumer decision process

-4 p's!

-psychological factors

-social factors

-situational factors

psychological factors: motives

Maslov's Hierarchy of Needs

-self actualization

-esteem

-love

-safety

-physiological (hunger)

we want to climb the hierarchy!

psychological factors: attitudes

-cognitive (very strong belief about the brand or product)

-affective (emotional component, apple users are super loyal)

-behavioral (needing all the new apple products)

psychological factors: perception

-selection

-organization

-interpretation

perceptions drift sometimes

psychological factors: learning and memory

-learning affects both attitudes and perceptions

-memory involves encoding, storage, and retrieval

psychological factors: lifestyle

lifestyle involves decisions in spending time and money

Actual vs. Perceived Lifestyle

social factors: family

firms must consider how families make purchase decisions & understand how various family members might influence decisions (having kids, getting married)

when families make purchase decisions, they often consider needs of all family members

social factors: reference groups

family, friends, coworkers, famous people

these people will introduce you to new products!

those groups are providing: information & self image

social factors: culture

shared meanings, beliefs, morals, values of a group of people

like reference groups, cultures influence consumer behavior

a cultural group might be as small as a reference group at school or as large as a country or religion

situational factors

-purchase situation (getting a shirt for a job fair vs a shirt to wear to the clerb, can change how long the process will be)

-sensory situation (visual, auditory, olfactory, tactile, taste like smelling bread at grocery store)

-temporal state (the time around the purchase, do you have time?)

involvement & consumer buying decisions elaboration likelihood model

message (ad)

can go both ways, high involvement or low involvement

high involvement purchase model

-greater attention

-deeper processing

develops strong attitudes & purchase intentions

low involvement purchase model

-less attention

-peripheral processing

generates weak attitudes & increased use of cues

types of buying decisions

-extended problem solving: high involvement product, searching a lot

-limited problem solving: impulse buying, habitual decision making

B2B vs. B2C

in b2c has millions of transactions, so transaction wise this market is larger

in b2b, dollar wise this market is larger

types of markets in b2b

-resellers

-institutions

-government

-manufacturers/service providers

manufacturers & service providers

stands apart from the others cuz they actually manufacture the good or service that they're selling

-buy raw materials, components or parts

-manufacture their own goods & ancillary services

resellers

manufacturer --> wholesalers & distributors --> retailer

candy is the largest resell market in the US

institutions

Hospitals, educational institutions, and religious organizations

examples of purchases by institutions:

-textbooks

-capital construction

-equipment

-supplies

-food

-janitorial services

government

in most countries, government is one of the largest purchasers of goods& services

local, state, & federal

us government spends around 4 trillion annually: department of defense works with cybersecurity firms

b2b buying process

1. need recognition

2. product specification

3. RFP process

4. proposal analysis and supplier selection

5. order specification

6. vendor/performance assessment using metrics

1: need recognition

can be generated internally or externally ("u need a new phone")

2; product specification

after recognizing need & considering alternative solutions, create a list of potential specifications

used by suppliers/ vendors to develop proposals

3: rfp process, request for proposal

suppliers and vendors are invited to bid on supplying components, services, or specifications

-purchasing companies may post its RFP needs on its website to inform there prefered vendors directly

4: proposal analysis

buying organization evaluates all the proposals received in response to an RFP

often several vendors are negotiating against each other

considerations other than price play a role in final selection

5: order specification

firm places the order w preferred supplier

exact details of purchase are specified, including penalties for non compliance

all terms are detailed including payment

6: performance assessment using metrics

evaluating things like quality, delivery, etc like are you happy with it?

buying center roles b2b

example of buying new office chairs

-initiator (someone mentions that the chairs are getting worn down)

-influencer (people using the furniture may influence what kind of chair)

-decider (after feedback, decide what needs to be purchased)

-buyer (email the chairs to head of department)

-user (those who will use those chairs)

-gatekeeper

organizational culture

-set of values, traditions, & customs that guide employees behavior

-unspoken guidelines

-influenced purchasing decisions

democratic, consultative, autocratic, consensus

democratic

voting on it, whatever item receives most votes is what the company goes with

consultative

sales person pitched to group, chair would listen to what group has to say, based on that make a decision

autocratic

salesperson would only talk to department chair and chair would make decision for whole department

consensus

listens to sales person as a group and decides when they all agree (barely happens)

firms use multiple ways to enhance b2b relationships

-blogs

-social media

-social media influencers

-white papers (short research papers that signal your company is an expert at the matter)

buying situations

example is buying new computer

new buy (purchase for first time, uses all 6 steps&involve ppl in buying decision)

modified rebuy (buyer repurchases similar product but changes specifications like price, quality level, customer service level, current vendor still had advantage)

straight rebuy (repurchases additional units that have been purchased already, most b2b purchases fall in this category, buyer is only member of buying center involved)

globalization

the processes by which goods, services, capital, people, information, and ideas flow across national borders

components of a country market assessment

-Economic analysis using metrics

-Sociocultural analysis

-Infrastructure and technology

-Government actions

economic analysis using metrics

firms must consider 4 major economic factors to assess the viability of a potential market

1. general economic environment

2. market size & population growth rate

3. real income

evaluating general economic environment

firms analyze many economic metrics:

1. trade deficit (US imports more goods than it exports)

2. trade surplus (firms want to manufacture in countries that have higher level of exports than imports)

3. gross domestic product (market value of goods/services produced by a country in a year)

4. gross national income (GDP+net income earned from investments abroad)

5. purchasing power parity (if exchange rates of 2 countries are equal, a product purchases in one will cost the same in the other)

big mac index

the Economists big mac index employs PPP to assess the relative economic buying power among nations

avg american price: 5.69

taiwan: 2.46

switzerland: 8.07

more expensive the big mac is shows how much the consumer can afford

evaluating market size & population growth rate

firms must consider uneven population growth & distribution of populations

- strong growth rates in BRICS (brazil, russia, india, china, south africa)

- population is denser in urban areas

uneven growth rates: spurts of growth but also periods where population takes a dip, so sales take a dip too

want an even growth rate

way to get even growth rates

-decreased mortality rate

-access to improved health & medicine

-improved literacy & education rates

also want to see an even distribution of populations

evaluating real income

firms can adjust prices to meet unique markets such as bottom of the pyramid markets (less income, so they make products more affordable for that market)

analyzing infrastructure & technical capabilities

marketers are especially concerned w 4 key elements of a country's infrastructure:

-transportation

-distribution channels

-communications

-commerce

cannon example with infrastructure and technological capabilities

dannon decided to move to senegal

-senegal has low literacy rate so communication will be a product

-couldn't guarantee trucks would be refrigerated to stores (distribution channels & transportation)

-some people don't go to stores and get stuff from bike sales people (DC)

-in the US, if u buy yogurt u maybe eat 1 a day for bfast but in senegal its considered a treat like once a week (commerce)

how did dannon get around this?

-senegal low literacy, high patriotism: so they changed their colors to match senegal

-sold them in individual tubes instead

-changed consistency so it wouldn't have to be refrigerated

-sold cheaply!

successful!!!!!

analyzing governmental actions

actions governments & political groups can highly impact firm performance

-tariffs

-quotas

-exchange control

-trade agreements

tariffs & quotas

tariffs

-tax on imported good

-artificially raises prices

-lowers demand

quotas

-limit amount of imported goods

-reduces availability

both benefit domestically made products because they reduce foreign competition

exchange control

regulation of country's currency exchange rate

prices are nearly always lower in the country of origin

trade agreements

a trade agreement is an intergovernmental agreement to promote trade activities for specific region

trading bloc consists of countries that have signed a particular trade agreement

regional trade agreements have faced recent challenges but account for over half international trade

analyzing sociocultural factors

understanding another culture is crucial to the success of a global marketing initiative

culture exists on 2 levels:

-visible artifacts

-underlying values

tool you can use to assess a country's culture: Geert Hofstedes cultural dimensions

-power distance

-uncertainty avoidance

-individualism

-masculinity

-time orientation

-indulgence

power distance

willingness for country to accept social inequality as natural

uncertainty avoidance

extent to which society relies on orderliness, consistency, structure and formalized procedures to address situations that arise in daily life

US falls towards the high end

individualism/collectivism

perceived obligation to independence on groups (collectivism)

individualism is far opposite of that, so not relying on groups

US very individual

masculinity

extent to which dominant values are male oriented

US closer to masculinity side

time orientation

there's short vs long (willing to accept long term time commitment, more patient)

US is short term

indulgence

extent to which society allows for the gratification of fun and enjoyment

US high on it

Country Clusters Power Distance and Individualism

yes

choosing a global entry strategy

firms must choose a strategy based on the level of risk & its own capabilities

-exporting (least amount of control, least amount of risk)

-franchising

-strategic alliance

-joint venture

-direct investment (most amount of control, most amount of risk)

exporting

producing goods in one country & selling them in another

this entry strategy requires the least financial risk but also allows for only a limited return to the exporting firm

least financial risk, but also least amount of control

american fuel is our number 1 export!

franchising

allows franchisee to operate a business using the name & business format developed & supported by the other franchiser

subway is a global franchiser

strategic alliance

collaborative relationship between independent firms but the partnering firms don't create an equity partnership

nestle and starbucks partnering together, nestle can package those products in grocery stores (not developing new product)

joint venture

formed when a firm entering a market pools its resources with those of a local firm

ownership, control, & profits are shared

local partner offers the foreign entrant greater understanding of market & access to resources such as venders & real estate

kelloggs & wilmar (kelloggs doesn't know about china market so partners w wilmar and they sell the products together, new products!!! much riskier)

direct investment

requires a firm to maintain 100% ownership in foreign country

starbucks went to china and opened there with no help from chinese companies

choosing a global marketing strategy

target market: segmentation, targeting, positioning

selecting global markets is complicated for many reasons

-sub cultures

-cultural nuances

-cultural view of product & consumer roles

-different positioning

-adaptation

global product/service strategies

3 potential strategies:

-sell same product in home country & host country

-adapt product using global localization

-sell entirely new product

oreo tried to go to china, didn't change anything and didn't sell well, so they changed the product (smaller packaging, smaller price, less sugar, new versions of product)

global pricing strategies

firms must consider several factors to determine selling price in global marketplace

-competitive factors

-tariffs, quotas, currency exchange policies

-local restrictions (ads & price mins)

global distribution strategies

global distribution networks form complex value chains

in developing countries consumers may shop at small family owned stores

suppliers must be creative in delivering to these outlets

global communication strategies

-literacy levels (if lower, people rely on colors)

-language & customs (not using same spanish in different latin countries)

-culture & religion (knowing importance of culture & religion in the country)