Principles of Marketing Chapters 5, 7, 8, and 10: Consumer Behavior, Segmentation, Products, and Pricing

What are the four major factors influencing consumer buying behavior?

Cultural, social, personal, and psychological factors.

What is culture in the context of consumer behavior?

The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and institutions.

What are the three types of reference groups in social factors?

Aspirational, associative, and dissociative reference groups.

Name a personal factor that affects consumer behavior.

Occupation, age and life stage, economic situation, lifestyle, or personality.

What is perception in psychological factors?

The process by which people select, organize, and interpret information to form a meaningful picture of the world.

What is selective attention?

Focusing on a particular object or task while ignoring other stimuli or distractions.

Define selective distortion.

The tendency to distort or misinterpret messages to fit preconceived notions or expectations.

What is selective retention?

The process of remembering information that aligns with one's beliefs or values while forgetting contradictory details.

What is the first stage of the buyer decision process?

Need recognition, where the consumer recognizes a problem or need.

What triggers need recognition?

Internal stimuli or external stimuli.

What is the information search stage in the buyer decision process?

The stage where the consumer is motivated to search for more information about a product.

List the sources of information during the information search stage.

Personal sources, commercial sources, public sources, and experiential sources.

What is alternative evaluation in the buyer decision process?

The stage where the consumer evaluates alternative brands in the choice set.

What is the difference between a consideration set and a choice set?

A consideration set includes 10 or more brands, while a choice set includes 5 or fewer brands.

What is the purchase decision stage?

The buyer's decision about which brand to purchase.

What does post-purchase behavior refer to?

The satisfaction or dissatisfaction experienced after the purchase, based on expectation vs. actual performance.

What is market segmentation?

Dividing a market into smaller segments with distinct needs, characteristics, or behaviors.

What are the four bases for segmenting consumer markets?

Geographic, demographic, psychographic, and behavioral segmentation.

Define geographic segmentation.

Dividing the market into different geographical units such as nations, regions, or cities.

What is demographic segmentation?

Dividing the market based on variables such as age, gender, income, and education.

What does psychographic segmentation focus on?

Dividing a market based on social class, lifestyle, or personality characteristics.

What is behavioral segmentation?

Dividing a market based on consumer knowledge, attitudes, uses of a product, or responses to a product.

Give an example of a company using lifestyle segmentation.

Rocky Mountain Tiny Houses, catering to consumers seeking a 'tiny house' lifestyle.

What is the role of family in social factors affecting consumer behavior?

Family influences consumer preferences and purchasing decisions.

How can economic situation affect consumer behavior?

It influences consumers' purchasing power and spending habits.

What is the significance of personality in consumer behavior?

Personality traits can influence preferences and buying decisions.

What is a target market?

A set of buyers who share common needs or characteristics that the company decides to serve.

What is undifferentiated marketing?

A strategy that targets the whole market with one offer, focusing on common needs rather than differences.

What is differentiated marketing?

A strategy that targets several different market segments and designs separate offers for each.

What is micromarketing?

The practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

What is individual marketing also known as?

One-to-one marketing or mass customization.

What is concentrated marketing?

A strategy that targets a large share of a smaller market, also known as niche marketing.

What does product position refer to?

The way the product is defined by consumers based on important attributes and perceptions compared to competing products.

What are positioning maps used for?

To show consumer perceptions of a marketer's brands versus competing products on important buying dimensions.

What differentiation strategy has Starbucks used against Dunkin?

More for more (more benefits, higher price).

What differentiation strategy has Hyundai used against Toyota and Honda?

More for the same (more benefits, same price).

What differentiation strategy has Walmart used against conventional grocery stores?

The same for less (same benefits, lower price).

What differentiation strategy has Aldi used against Kroger and Walmart?

Less for much less (less benefits, much lower price).

What is the benefit of using behavioral segmentation?

It helps companies tailor their marketing strategies based on customer behaviors and preferences.

What are the three categories of user status in behavioral segmentation?

Non-users, current-users, and ex-users.

What are the two categories of usage rate in behavioral segmentation?

Light users and heavy users.

What is the main focus of mass marketing?

To address the common needs of the entire market.

What is the goal of differentiated marketing?

To create tailored offers for different market segments.

What is an example of a company that uses individual marketing?

FitMyFoot, which 3-D prints footwear based on customer images.

What is a key characteristic of service marketing?

It often involves intangible products that require different marketing strategies than physical goods.

What is the goal of positioning in marketing?

To create a distinct image of the product in the minds of consumers.

What does 'more for less' mean in differentiation strategy?

Offering more benefits at a lower price compared to competitors.

What is the significance of consumer perceptions in product positioning?

They shape how consumers view a product compared to its competitors.

What is the relationship between market segmentation and targeting?

Segmentation identifies distinct groups within a market, while targeting selects which groups to serve.

What is the primary benefit of micromarketing?

It allows for highly personalized marketing strategies that cater to individual preferences.

How does differentiated marketing differ from undifferentiated marketing?

Differentiated marketing targets specific segments with tailored offers, while undifferentiated marketing targets the entire market with a single offer.

What is a product?

Anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want.

What are the two main classifications of products?

Consumer products and industrial products.

What are consumer products?

Products and services bought by final consumers for personal consumption.

Name the four types of consumer products.

Convenience products, shopping products, specialty products, unsought products.

What is a convenience product?

A product that is bought frequently, immediately, and with minimal effort.

What is a shopping product?

A product that consumers compare on attributes such as quality, price, and style before purchasing.

What is a specialty product?

A product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.

What is an unsought product?

A product that the consumer does not know about or knows about but does not normally think of buying.

What are the three levels of product decisions?

Individual product level, product line level, product mix level.

What is product line length?

The number of items in a product line.

What is product line depth?

The number of versions offered of each product in the line.

What is product line filling?

Adding more items within the present price range of the line targeting the same market segment.

What is product line stretching?

Lengthening a product line beyond its current price range to target a different market segment.

What does product mix consist of?

All the product lines and items that a particular seller offers for sale.

What is product mix width?

The total number of different product lines a company offers.

What is product mix length?

The total number of individual products a company offers across all its product lines.

What is brand equity?

The differential effect that knowing the brand name has on customer response to the product or its marketing.

What are the four types of brand sponsorship?

Manufacturer's brand, private brand, licensed brand, co-branding.

What is co-branding?

When two or more well-known brands collaborate to create a joint product, service, or marketing campaign.

What is customer value-based pricing?

Setting prices primarily to match the buyers' perceptions of value.

What is the role of services in product marketing?

Services are intangible activities, benefits, or satisfactions that do not result in ownership.

What is the significance of branding strategies?

Branding strategies help in creating brand recognition and loyalty among consumers.

What is the purpose of product decisions in marketing?

To effectively manage and position products to meet consumer needs and preferences.

What is an example of product line filling?

Nestlé expanding the KitKat line with KitKat Mini, KitKat Chunky, etc.

What is an example of product line stretching downward?

Apple introducing the iPhone SE as a more affordable version of its flagship iPhones.

What is an example of product line stretching upward?

Samsung introducing Galaxy Z Fold and Z Flip as high-end smartphone options.

What is the benefit of carrying private-label brands for retailers?

Private-label brands can enhance profit margins and customer loyalty.

What is cost-based pricing?

Setting prices based on the costs of production, distribution, and selling, plus a fair return.

What is competition-based pricing?

Setting prices primarily based on competitors' prices.

What is good-value pricing?

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

What is value-added pricing?

Adding features and services to differentiate offers and support higher prices.

What is cost-plus pricing?

Adding a standard markup to the cost of the product.

What is break-even pricing?

Setting a price to break even on costs or to achieve a target return.

What are fixed costs?

Costs that do not vary with production or sales levels.

What are variable costs?

Costs that vary directly with the level of production.

What is total cost?

The sum of fixed and variable costs for a given level of production.

How do you calculate unit fixed cost?

Unit fixed cost = Fixed cost / Number of units produced.

What is the formula for total revenue?

Total revenue = Price × Expected demand.

What is the formula for total cost?

Total cost = Fixed cost + (Unit variable cost × Expected demand).

How do you calculate profit?

Profit = Total revenue − Total cost.

What is the formula for break-even volume?

Break-even volume = Fixed cost ÷ (Price − Unit variable cost).

What is the formula for break-even price?

Break-even price = Fixed cost / Break-even volume + Unit variable cost.

What is an example of good-value pricing?

Mercedes-Benz CLA Class with a focus on quality at a fair price.

What is an example of value-added pricing?

The Porsche Drive subscription program offering a fleet of Porsches.

What are examples of cost-plus pricing?

Retailers like Walmart for private label products and customized products.

What are examples of break-even pricing?

Amazon's Kindle devices and Walmart's loss leaders.

What is an example of competition-based pricing?

Airlines like Delta and American Airlines setting prices based on competitors.

What are some industries that commonly use competition-based pricing?

Airlines, ride-sharing companies, retailers, technology companies, and fast food chains.

When is cost-plus pricing a poor choice?

When market conditions require more competitive pricing strategies.