Marketing Exam 2 Review: Consumer Behavior, STP, Products & Pricing

How do shopping behaviors differ among Hispanic American, Black American, and Asian American consumers?

Shopping behaviors can differ based on cultural values, preferences, and social influences. For example, Hispanic American consumers may prioritize family-oriented shopping experiences, while Asian American consumers may focus on quality and brand reputation.

What are the three different types of reference groups?

The three types of reference groups are: 1) Associative groups, which individuals belong to (e.g., friends); 2) Dissociative groups, which individuals do not want to associate with (e.g., rival teams); 3) Aspirational groups, which individuals aspire to join (e.g., celebrities).

How do age and life stage influence shopping behavior?

Age and life stage affect shopping behavior as different age groups have varying needs and preferences. For instance, young adults may prioritize fashion and technology, while older adults may focus on health products and convenience.

What is Maslow's hierarchy of needs?

Maslow's hierarchy of needs is a psychological theory that categorizes human needs into five levels: physiological, safety, love/belonging, esteem, and self-actualization. Businesses can satisfy multiple needs simultaneously, such as a gym offering fitness classes (esteem) and a community (belonging).

What are selection attention, selective distortion, and selective retention?

Selection attention is the process of focusing on certain stimuli while ignoring others. Selective distortion refers to the tendency to interpret information in a way that aligns with existing beliefs. Selective retention is the ability to remember information that supports one's views.

What is the buyer decision process?

The buyer decision process includes five stages: problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. For example, a consumer may recognize a need for a new phone, research options, compare features, make a purchase, and later evaluate satisfaction.

How is consumers' need triggered?

Consumers' needs can be triggered by internal stimuli (e.g., hunger, thirst) or external stimuli (e.g., advertising, social influences). For instance, a commercial for a new snack may create a craving (external stimulus).

What are the different sources of information available to consumers at the information search stage?

Sources of information include personal sources (friends, family), commercial sources (advertisements, salespeople), public sources (media, reviews), and experiential sources (product trials).

What is the difference between consideration set and choice set?

The consideration set includes all the brands a consumer is aware of and considers for purchase, while the choice set is the subset of brands that the consumer is actually willing to choose from.

What determines the buyer's post-purchase satisfaction?

Post-purchase satisfaction is influenced by the product's performance relative to expectations, the quality of customer service, and the overall buying experience.

What is market segmentation?

Market segmentation is the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors.

What is geographic segmentation?

Geographic segmentation divides the market based on location, such as countries, regions, or cities. For example, a clothing brand may market winter apparel in colder regions.

What is demographic segmentation?

Demographic segmentation categorizes consumers based on age, gender, income, etc. For instance, a luxury brand targets high-income individuals, while a toy company targets children.

What is psychographic segmentation?

Psychographic segmentation divides the market based on lifestyle, values, and personality traits. For example, eco-friendly products target consumers who value sustainability.

What is behavioral segmentation?

Behavioral segmentation categorizes consumers based on their behaviors, such as purchase occasions, benefits sought, user status, and usage rate. For example, a coffee shop may target frequent users with loyalty programs.

What is product positioning?

Product positioning refers to how a product is perceived in the minds of consumers relative to competing products, often defined by unique attributes or benefits.

What is a positioning map?

A positioning map visually represents the positioning of products in a market based on two dimensions, such as price and quality, helping businesses identify market gaps.

What are the five different winning value propositions?

The five winning value propositions are: 1) More for more, 2) More for the same, 3) Same for less, 4) Less for much less, 5) More for less.

What is the difference between consumer products and industrial products?

Consumer products are goods purchased for personal use, while industrial products are goods used for business purposes. For example, a smartphone is a consumer product, while machinery is an industrial product.

What are the four types of consumer products?

The four types of consumer products are: 1) Convenience products (e.g., snacks), 2) Shopping products (e.g., clothing), 3) Specialty products (e.g., luxury cars), 4) Unsought products (e.g., life insurance).

What is a product line?

A product line is a group of related products marketed by a company, such as different flavors of a beverage.

What is product line length?

Product line length refers to the number of items in a product line, such as a brand offering five different types of shampoo.

What is product line depth?

Product line depth refers to the number of variations of a product within a line, such as different sizes and colors of a single shoe model.

What is the difference between product line filling and product line stretching?

Product line filling involves adding more items within the existing range, while product line stretching involves adding items at different price points or quality levels.

What is product mix?

Product mix is the total range of products offered by a company, including all product lines and items.

What is product mix width?

Product mix width refers to the number of different product lines a company offers, such as a company selling both beverages and snacks.

What is product mix length?

Product mix length is the total number of items in the product mix, encompassing all product lines.

What are the four characteristics of a service?

The four characteristics of a service are intangibility, inseparability, variability, and perishability. Perishability means services cannot be stored for later use, such as hotel rooms that go unsold.

What is brand equity?

Brand equity refers to the value added to a product by having a well-known brand name, which can lead to customer loyalty and premium pricing.

What are the four brand sponsorship options a manufacturer can choose?

The four brand sponsorship options are: 1) Manufacturer's brand, 2) Private label brand, 3) Licensed brand, 4) Co-branding.

What are the main benefits of carrying private label brands for a retailer?

Benefits include higher profit margins, increased customer loyalty, and differentiation from competitors.

What are the four brand development strategies?

The four brand development strategies are: 1) Line extension, 2) Brand extension, 3) Multi-brands, 4) New brands.

What are the three major pricing strategies?

The three major pricing strategies are: 1) Cost-based pricing, 2) Value-based pricing, 3) Competition-based pricing.

What is customer value-based pricing?

Customer value-based pricing sets prices based on the perceived value to the customer rather than the cost of the product.

What is good-value pricing?

Good-value pricing offers the right combination of quality and good service at a fair price, exemplified by brands like Walmart.

What is value-added pricing?

Value-added pricing involves attaching additional features or services to differentiate the product and justify a higher price, such as premium coffee shops offering unique blends.

What is cost-based pricing?

Cost-based pricing sets prices based on the costs of production plus a markup for profit.

What are fixed costs, variable costs, and total costs?

Fixed costs remain constant regardless of production levels (e.g., rent), while variable costs fluctuate with production (e.g., materials). Total costs are the sum of fixed and variable costs.

What is cost-plus pricing?

Cost-plus pricing involves adding a standard markup to the cost of the product to determine its selling price.

What is break-even pricing?

Break-even pricing determines the price at which total revenue equals total costs, resulting in no profit or loss.

How can break-even analysis be used to set prices?

Break-even analysis helps businesses determine the minimum sales needed to cover costs, guiding pricing decisions.

How to calculate total revenue, total costs, and profit?

Total revenue is calculated by multiplying the price per unit by the number of units sold. Total costs are the sum of fixed and variable costs, and profit is total revenue minus total costs.

What is competition-based pricing?

Competition-based pricing sets prices based on competitors' strategies, prices, and market offerings.

Selective attention

The process of focusing on certain stimuli while ignoring others.

Selective distortion

The tendency to interpret information in a way that aligns with one's existing beliefs.

Selective retention

The ability to remember information that supports one's beliefs while forgetting contradictory information.

Cognitive dissonance

The mental discomfort experienced when holding two or more contradictory beliefs or values.

Need recognition

The first stage in the consumer decision-making process, where a consumer identifies a need or problem.

Occasion segmentation

Dividing the market based on specific occasions when consumers are likely to purchase a product.

Concentrated (niche) marketing

A targeting strategy that focuses on a large share of a small market segment.

Unsought products

Products that consumers do not think about buying until a need is brought to their attention.

Product line filling

Adding more items within the existing price range of a product line to serve the same market.

Multibranding

A brand development strategy where multiple brand names are used within the same product category.

Cost-plus (markup) pricing

A pricing strategy where a fixed percentage is added to the cost of the product to determine its selling price.

Good-value pricing

Offering a fair combination of quality and service at a low price.

Value-added pricing

Setting prices based on the perceived value of additional features or services.

Break-even pricing

Setting prices to cover costs and achieve a break-even point without making a profit.

Competition-based pricing

Setting prices based on competitors' pricing strategies.

Differentiated (segmented) marketing

A strategy that targets several market segments with separate offers for each.

Undifferentiated (mass) marketing

A marketing strategy that targets the entire market with one offer.

Individual marketing

Tailoring products and marketing programs to suit individual customers.

Lifestyle segmentation

Dividing the market based on consumer lifestyles, interests, and activities.

User status segmentation

Segmenting the market based on whether consumers are non-users, ex-users, potential users, first-time users, or regular users.

Usage rate segmentation

Dividing the market based on the frequency of product usage.

Benefits sought segmentation

Segmenting the market based on the specific benefits consumers seek from a product.

Product mix width

The number of different product lines a company offers.

Product line length

The total number of items in a product line.

Product line depth

The number of variations of a product within a product line.

Brand extension

Using an existing brand name to launch a new product in a different category.

Line extension

Introducing new variations of an existing product under the same brand name.